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Author: 

Security  Trust  &  Savings 
Bank 

Title: 

The  cattle-raising  industry 
of  the  Southwest 

Place: 

Los  Angeles 

Date: 

1921 


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The   Cattle-Raising   Industry 
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LOS  ANGELES 


The  Cattle-Raising  Industry 
of  the  Southwest 


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Security  Trust  &  Savings  Bank   .  L^^  n  ^^ 


Prepared  by 

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The  Cattle  Industry  in  the  Southwest 

THE  importance  of  Los  Angeles  as  a  live  stock  center  of  the  great  South- 
west needs  no  argument.  Surrounded  by  the  vast  ranges  of  Nevada, 
Arizona  and  Southern  California,  and  with  adequate  rail  service  link- 
ing tliese  sources  of  production  with  the  abundant  alfalfa  pastures  and  beet 
fields  of  the  southern  coast,  Los  Angeles  has  become  conscious  of  her  strategic 
situation.  Growers  of  the  neighboring  citrus  belt  bid  for  the  nitrogenous 
refuse  of  feed  lots,  modernly  equipped  packing  plants  are  at  hand  for  the  re- 
duction of  animals  to  food,  a  million  people  within  immediate  reach  assure 
an  unfailing  market  for  beef  and  by-products,  and  the  regular  service  of  re- 
frigerator ships  and  railway  cars  to  the  high  price  beef  markets  of  the  East 
would  guarantee  an  outlet  for  any  possible  surplus. 

Cattle  raising  is  directly  and  indirectly  a  source  of  great  wealth  to  the 
City  of  Los  Angeles  and  environs.  Any  danger  to  this  essential  industry,  such 
as  is  threatened  by  the  recent  decline  of  cattle  prices  to  below  cost  of  produc- 
tion, must  be  met.  This  can  only  be  accomplished  by  proper  financial  sup- 
port, and  by  the  intelligent  co-operation  of  the  general  public. 

In  view  of  these  facts,  and  in  keeping  with  the  purpose  of  the  Security 
Trust  &  Savings  Bank  carefully  to  gather  data  and  to  publish  from  time  to 
time  unbiased  information  upon  agricultural  and  industrial  conditions,  and 
other  subjects  of  business  import,  the  following  report  of  conditions  now 
existing  in  the  cattle  raising  industry  of  the  Southwest  has  been  prepared. 

Sources  of  Information 


Investigation  of  the  industry  has  in- 
cluded conferences  with  cattle  raisers,  offi- 
cers of  packing  houses,  cattle  loan  associa- 
tions, feed  yard  owners,  butchers  and  cat- 
tle buyers.  From  a  review  of  the  opinions 
thus  collected  there  is  presented  what  is 
thought  to  be  a  fairly  accurate  picture  of 
the  present  situation  as  it  appears  to  va- 
rious interests  involved. 

To  determine  actual  statistical  facts, 
census  reports  have  been  examined  and 
compared  to  ascertain  the  number  of  cat- 
tle in  various  regions,  with  particular  ref- 
erence to  their  increase  or  decrease.  Price 
trends  have  been  established  by  examina- 
tion of  records  kept  by  stockmen,  packers 
and  retail  meat  buyers,  and  from  current 
market  reports.     Recourse  has  been  had 


to  publications  of  the  United  States  De- 
partment of  Agriculture  and  of  Federal 
Reserve  Banks  for  information  concern- 
ing crop  and  weather  conditions  in  dif- 
ferent sections  of  the  Southwest.  Com- 
parative periodical  receipts  of  beef  cattle 
at  slaughtering  centers,  and  shipments  of 
stocker  and  feeder  cattle  back  to  the  ranges 
have  been  determined  from  similar  official 
sources.  To  discover  the  volume  of  cattle 
paper  dealt  in  by  cattle  loan  associations 
and  by  banks  rediscounting  through  the 
Federal  Reserve  Banks,  access  has  been 
had  to  books  of  loan  associations  at  Los 
Angeles,  and  records  of  live  stock  paper 
kept  by  the  Federal  Reserve  Bank  at  San 
Francisco.  Data  concerning  present  con- 
ditions existing  in  cattle  regions,  such  as 

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shortage  of  feeders  and  abnormal  slaughter 
of  female  stock,  have  been  furnished 
through  the  co-operation  of  such  organiza- 
tions as  the  California  Cattlemen's  Asso- 
ciation, the  American  National  Live  Stock 
Association,  and  the  Institute  of  American 
Meat  Packers. 

Financial  Difficulties 

Beef  cattle  producers  are  undergoing  a 
period  of  deflation  and  of  liquidation  at 
prices  under  cost  of  production  not  un- 
like that   being   experienced   by   farmers, 
and  indeed  by  most  other  producers  in  the 
country.    The  suffering  among  cattle  rais- 
ers,   however,   is    apparently    more    acute 
and  relief  more  difficult  to  obtain.     Their 
products  have  been  probably  the  first  to 
drop  to  a   pre-war   price,   and  the   usual 
sources  of  financial  aid  have  become  more 
and    more    inaccessible.      Stockmen    now 
find  themselves  with  cattle  on  hand  raised 
during  the  period  of  highest   production 
costs,  with  feed,  interest,  labor  and  rail- 
road rates  from  50%  to  90%  above  nor- 
mal, and  a  present  market  for  their  stock 
which  has  reached  a  point  below  normal 
after  a  precipitate  drop  of  50%  in  eight 
months.     In  short,  cattle  which  were  pro- 
duced  at   a   cost    of   8c    per   pound    and 
which  were  selling  at  12c  per  pound  last 
year  cannot  be  disposed  of  now  for  more 
than  6c  on  the  hoof.     Stock  raisers  are 
confronted  with  this  situation  at   a  time 
when  they  are  in  urgent  need  of  funds  for 
the  purchase  of  bulls  and  new  stock  to  re- 
habilitate their   herds,   and   for  the   pay- 
ment of  ordinary   running  expenses   this 
fall  and  winter,  and  they  find  money  al- 
most  unobtainable.      Few   banks  are  dis- 
posed to  purchase  cattle  paper,  and  those 
cattle  loan  associations  which  are  willing 
to  make  new  loans,  are  demanding  a  pro- 
hibitive rate  of  interest.     Moreover,  these 
same  loan  associations  are  calling  in  ma- 
tured loans  as  rapidly  as  possible,  forcing 
cattle  raisers  to  sell  off  their  cattle  at  any 
price    obtainable,    further    depressing    a 
badly   demoralized   market.      Under   such 
circumstances  the  stockmen  have  two  al- 
ternatives: to  obtain  money  to  enable  them 
to  hold  over  for  better  prices,  or  to  sell  off 
everything   at   any   price.    Money   cannot 
be  obtained,  therefore  the  latter  course  is 
being  resorted  to  by  many.    Evervthing  is 

4] 


being  sold  that  the  packer  will  buy,  lean 
steers,  breeding  cows,  heifers  and  calves. 

Decline  of  Prices 

The  present  low  level  in  cattle  prices 
is  the  logical  economic  result  of  inflated 
values  and  over-production  during  the 
war  and  the  period  immediately  following. 
Cattle  prices  reached  bottom  before  prices 
of  most  other  commodities,  partly  because 
of  unsound  credit  expansion  permitted  by 
cattle  loan  associations  and  by  some  of 
the  banks  during  the  war,  and  partly  be- 
cause of  the  unprecedented  decline  of 
by-products  values,  a  decline  which  in  the 
case  of  hides  amounted  to  75%.  Another 
cause  has  been  a  marked  falling  off  in  the 
per  capita  consumption  of  beef,  thought  to 
be  due  in  part  to  the  failure  of  butchers 
to  reduce  retail  prices  in  consonance  with 
cattle  and  wholesale  meat  prices. 

Average  prices  of  cattle  received  by 
producers  of  the  United  States  are  given 
by  the  United  States  Department  of  Agri- 
culture as  $6.01  (per  100  lbs.)  for  the 
year  1912;  $10.84  for  1919,  and  $5.65  for 
June  15,  1921,  showing  a  rise  of  80% 
from  1912  to  1919,  and  a  drop  of  48% 
from  the  peak  to  a  present  price  of  6% 
under  that  of  1912.  California  prices 
were  $6.75  in  1912,  $12.00  in  1918  and 
$6.00  in  August,  1921,  indicating  a  rise 
of  75%  from  normal  to  the  peak,  and  a 
later  drop  of  50%  to  a  point  12%  below 
the  pre-war  figure.  Meanwhile  hides  rose 
from  $15.00  (per  100  lbs.)  before  the 
war,  to  $30.50  in  1919.  and  declined  to 
$5.20  in  March  of  this  year. 

Average  retail  meat  prices  in  Los  An- 
geles increased  from  20c  per  pound  in 
1914  to  421/2  in  1920,  and  have  fallen  to 
261/^0  in  August,  1921,  representing  a 
rise  of  113%  to  the  highest  point,  and  a 
subsequent  decline  of  approximately  37% 
to  a  point  32%  above  normal. 

Production  Costs 

Costs  of  production  are  still  above  nor- 
mal. The  principal  factors  are  feed,  in- 
terest on  money,  and  labor.  Range  pas- 
ture which  could  be  leased  at  75c  per  acre 
before  the  war  and  at  $1.25  during  the 
war,  can  now  be  had  at  $1.00.  Feed  yard 
charges  which  were  25c  per  animal  per 


day  before  the  war,  and  60c  in  1919,  have 
been  reduced  to  40c.  Interest  rates  on 
cattle  paper  which  advanced  from  8%  to 
10-12%  in  1920,  are  still  at  10%.  Alfalfa 
hay  in  the  stack  now  costs  about  $6.(X)  per 
ton.  This  is  practically  the  only  cost 
factor  which  has  been  reduced  to  a  pre- 
war price. 

The  decline  in  labor  costs  has  been 
about  35%.  Cowboys  who  were  paid 
$30.00  per  month  before  the  war  and 
$90.00  in  1919-20,  can  now  be  hired  for 
$55.00.  It  is  not  probable  that  there  will 
be  a  further  considerable  decline  in  wages, 
but  the  labor  item  in  cattle  raising  is  com- 
paratively of  little  weight. 

By  a  process  of  giving  to  each  cost 
factor  its  proportionate  weight  in  the  total 
cost  of  production,  it  may  be  calculated 
that  the  weighted  average  cost  of  raising 
cattle  is  still  50^^  above  normal. 

Conditions    in    Different    Sections    of 
the  Southwest 

Live  stock  producers  in  California,  Ari- 
zona and  Nevada  have  suffered  less  from 
the  price  decline  than  those  of  other  cat- 
tle states.  The  fact  that  western  cattle 
are  mostly  "range  fattened"  has  made  it 
possible  for  raisers  in  this  region  to  hold 
their  animals  for  better  prices  without  in- 
curring heavy  expenses  for  feed.  Com- 
paratively few  substantial  stockmen  in  the 
West  have  been  forced  into  liquidation, 
though  all  are  seeing  hard  times.  Failures 
have  occurred  for  the  most  part  among 
speculators  operating  with  very  little  cap- 
ital of  their  own,  but  with  funds  bor- 
rowed at  excessive  interest  rates.  The 
elimination  of  such  individuals  will  have 
a  health-restoring  effect  on  the  industry 
as  a  whole. 

Arizona  has  been  hard  hit  by  the  drouth 
this  spring  and  cattle  raisers  in  the  south 
have  lost  as  high  as  25%  of  their  stock. 
Rains  have  come  at  last,  however,  and 
pasturage  conditions  are  now  said  to  be 
excellent.  Agents  of  the  United  States 
Department  of  Agriculture  report  pastur- 
age conditions  in  Nevada  at  normal,  and 
in  California  at  about  85%  of  normal. 


Possibility  of  Cattle  Shortage 

The  much  talked  of  shortage  of  cattle  is 
more  apparent  than  real.  It  is  true  that 
the  per  capita  number  of  cattle  now  on 
the  ranges  is  considerably  less  than  that 
of  last  year  and  slightly  under  the  pre- 
war normal,  the  per  capita  decrease  since 
1910  having  been  15%  for  California, 
23%  for  Arizona,  and  5%  for  the  United 
States  as  a  whole,  while  an  actual  increase 
of  23%  is  shown  for  Nevada.  Meanwhile 
annual  per  capita  consumption  of  beef  in 
this  country  has  fallen  from  78  pounds  to 
561^  pounds,  a  decline  of  about  27%,  and 
exports  of  beef  products  have  declined 
75%  since  the  spring  of  1920.  The  al- 
leged shortage  of  production  is  therefore 
entirely  a  numerical  one,  and  does  not 
take  into  consideration  the  relative  de- 
crease in  demand  for  beef  and  beef  prod- 
ucts. 

Price  Outlook 

The  price  outlook  for  the  future  is 
hopeful.  Exports  of  beef  during  August 
showed  an  increase  over  those  of  July. 
The  recently  imposed  30%  ad  valorem 
duty  on  imported  beef  cattle  will  restrict 
any  increase  in  supply  from  Canada  and 
Mexico.  Surplus  stock  has  been  largely 
disposed  of,  and  prices  at  Chicago  have 
already  taken  an  upward  turn. 

Necessity   for   Improved   Methods   of 
Finance 

One  of  the  most  important  needs  of  the 
cattle  industry  is  for  a  permanent  and 
adequate  system  of  financing.  Longer 
term  loans,  on  a  sound  basis  of  valuation, 
reasonable  interest  rates,  and  a  more  fluid 
discount  market  for  cattle  paper  are  the 
essentials.  Present  interest  rates  are  too 
high  to  permit  of  a  safe  margin  of  profit 
for  the  producer,  and  terms  not  long 
enough  to  allow  him  to  bring  his  cattle  to 
a  selling  value  over  cost  of  production. 
Cattle  loans  must  be  made  on  a  sounder 
basis  of  valuation  than  has  often  been  the 
practice  heretofore,  so  that  cattle  paper, 
enjoying  easy  liquidity,  may  bear  a  lower 
rate  of  interest. 

The  $50,000,000  cattle  loan  pool  formed 
at  Chicago  on  June  15  to  be  contributed 

[5 


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ii 


to  by  banks  all  over  the  country  and  ad- 
ministered by  the  Bankers  Live  Stock  Loan 
Corporation,  can  only  be  considered  a  step 
in  the  right  direction.  The  amount  sub- 
scribed is  of  course  inadequate  for  the 
financing  of  an  industry  of  such  magni- 
tude as  that  of  live  stock  raising.  It  is  sup- 
posed, however,  that  the  initial  subscrip- 
tion is  to  serve  merely  as  a  nucleus  for  the 
development  of  a  more  ample  fund  if  the 
wisdom  of  the  undertaking  is  demon- 
strated. Participation  in  the  pool  by  large 
banks  all  over  the  country  will  stimulate 
new  interest  in  the  cattle  industry,  and  in- 
vestigation of  loan  methods  now  under 
way  should  do  much  to  reveal  and  elimi- 
nate unsound  practices.  It  is  to  be  ex- 
pected that  an  industry  such  as  cattle  rais- 
ing, which  is  so  closely  allied  with  an  in- 
dustrial activity  representing  a  greater  an- 
nual production  in  value  than  any  other 
one  business  in  the  United  States — that  of 
meat  packing — will  gain  the  confidence  of 
bankers  and  come  to  enjoy  the  same  finan- 
cial support  that  is  afforded  other  essential 
industries. 

Relative  Importance  of  Cattle  to  the 

Southwest 

Although  California  is  primarily  an 
agricultural  state,  it  ranks  fifth  in  number 
of  head  and  fourth  in  valuation  of  cattle 
among  the  beef  producing  states  of  the 
Union,  being  outranked  in  number  only 
by  Texas,  Iowa,  Nebraska  and  Kansas. 
"Die  number  of  cattle  (other  than  milk 
cows)  in  California  this  year  is  esti- 
mated by  the  United  States  Department 
of  Agriculture  to  be  1,683,000,  or  3.9% 
of  all  beef  cattle  in  the  country.  The 
value  is  estimated  at  S74,052,006.  Ari- 
zona has  approximately  1.000,000,  and  Ne- 
vada 540,000  head,  representing  2.6%  and 
1.3%,  respectively,  of  the  total  in  the 
United  States.  Together  the  three  states, 
California,  Arizona  and  Nevada,  there- 
fore produce  7.8%  of  the  country's  beef. 
Among  farm  products  of  the  state  of 
California,  the  1920  census  indicates  that 
beef  cattle  rank  fifth  in  value,  being  pre- 
ceded only  by  hay,  orchard  fruits,  citrus 
fruits,  and  grapes,  in  the  order  given. 


Future  of  the  Industry 

The  margin  of  profit  to  be  realized 
from  cattle  raising  in  California  has  be- 
come narrow.  Competition  of  agricul- 
tural and  horticultural  products  has  stead- 
ily forced  live  stock  raisers  to  the  less  fer- 
tile areas,  and  the  cost  of  leasing  land,  or 
of  interest  on  purchase  money,  has  risen 
to  the  point  of  bringing  cost  of  produc- 
tion too  near  to  possible  selling  price. 
Cattle  interests  must  work  toward  a  classi- 
fication of  ranges,  whereby  stock  will  be 
bred  and  raised  through  the  first  two 
years  on  cheap  ranges  or  possibly  on  free 
grazing  districts  or  forest  reserves,  leaving 
the  more  expensive  finishing  off  or  fat- 
tening process  for  producers  of  alfalfa 
hay  and  sugar  beet  and  cotton  growers, 
who  have  a  steady  supply  of  inexpensive 
feed  as  by-products  of  their  respective  en- 
terprises. In  other  words,  the  part  to  be 
played  by  this  state  in  the  cattle  raising 
industry  must  be  largely  that  of  a  feeding 
ground  for  fattening  grown  animals.  Ari- 
zona and  Nevada,  with  their  vast  areas  of 
cheap  grazing  land  and  contiguous  govern- 
ment ranges,  are  better  adapted  for  breed- 
ing grounds,  where  calves  may  be  pro- 
duced and  raised  until  ready  for  market 
fattening,  when  they  may  be  shipped  down 
to  the  alfalfa  districts  of  Southern  Califor- 
nia and  the  sugar  beet  fields  of  the  coast. 
Another  necessity  to  the  cattle  industry  of 
this  state  is  the  development  of  well-bred 
stock.  As  the  margin  of  profit  becomes 
narrower,  the  amount  of  beef  produced  per 
dollar  expended  must  be  increased,  which 
can  be  accomplished  only  by  raising  cattle 
capable  of  taking  on  weight  readily. 

Los  Angeles  is  apparently  destined  to 
become  the  center  of  the  meat  packing  in- 
dustry on  the  Pacific  Slope;  first,  because 
it  is  becoming  more  and  more  surrounded 
by  cotton  fields,  alfalfa  pastures,  and  sugar 
beet  plantations,  which  may  be  counted 
upon  to  furnish  a  steady  supply  of  inex- 
pensive and  good  feed;  and,  secondly,  be- 
cause it  is  the  nearest  common  shipping 
point  accessible  to  the  large  cattle  and 
sheep  ranges  of  the  Southwest. 


Principal  Factors  in  the  Cattle  Industry 


Distribution  of  the  Cattle  Supply 

Cattle  are  raised  in  every  corner  of  the 
world,  but  only  a  few  countries  are  im- 
portant sources  of  international  meat  sup- 
ply. India,  for  example,  with  130,000,000 
cattle,  has  more  than  any  other  two  coun- 
tries combined,  with  practically  no  beef 
exports.     Most   of  the  Indian  cattle  are 


•  ••  •  • 


8«B  Tta&olsoo 


next  to  India  in  the  number  of  cattle 
raised,  followed  by  Russia,  Brazil,  Argen- 
tina, Germany,  France,  Australia  and  Can- 
ada, in  the  order  named. 

According  to  the  Bureau  of  Crop  Esti- 
mates, there  are  42,870,000  head  of  cattle 
(other  than  milk  cows),  valued  at  $1,346,- 
665,000,   in  the   United   States  this  year. 
Texas,  with  4,547,000  head  (11%  of  all  in 
the  country)   has  nearly  as  many  as  any 
other    two    states    together,    followed    by 
Iowa,  with  2,969,000  head,  Nebraska  with 
2,650,000,    Kansas    with    2,075,000,    and 
California  ranking  next.     Arizona   ranks 
fourteenth  on  the  list  of  forty-eight  states. 
Other     cattle     raising     states,     in     order 
of     their     importance,     are;     Minnesota, 
Missouri,  Wisconsin,  New  Mexico,  South 
Dakota,     Illinois,    Colorado,     Oklahoma, 
Ohio,  Montana,  Florida,  New  York,  Ala- 
bama, Georgia,  Michigan,  Louisiana  and 
Wyoming.     It  is  interesting  to  note  that 
New    York,    with   882,000   head, 
has  more  cattle  (other  than  milk 
cows)  than  Wyoming,  one  of  the 
so-called    cowboy    states,    which 
has  only  720,000  head. 

In     California     beef    cattle 
raising  is  found 


in  nearly 
every  county,  in 
many   cases   so 


CALIFORNIA 


Distribution  of  Beef 
Cattle,  Based  on  Censoa 

of  1920 

1  dot3=1000  head  of  Cattle 


used  as  draft  animals,  all  arc  of  poor 
breed,  and  native  superstition  forbids  their 
use  for  meat.  Consequently  many  die  of 
old  age,  furnishing  only  hides  and  tallow 
to  the  market.    The  United  States  ranks 


/T 


u 


closely  allied  with  dairy  farms  that  sep-  for  the  entire  state,  though  many  cat* 
arate  figures  for  meat  and  dairy  animals  tie  are  shipped  r^ularly  to  Los  Angeles 
are  difficult  to  determine  accurately.     Ac-      for  slaughter. 


cording  to  the  government  census  survey 
of  1920,  the  industry  is  most  intense  in 
the  San  Joaquin  Valley  counties  of  Kern, 
Merced,  Tulare  and  Fresno,  and  the  coast 
counties  of  San  Luis  Obispo,  Monterey 
and  San  Diego.  The  accompanying  map 
shows  more  completely  the  general  distri- 
bution over  the  state. 

The  cattle  of  Arizona  are  more  or  less 
concentrated  about  the  Salt  River  Valley 
and  other  smaller  tributaries  of  the  Gila 
River.  The  general  aridity  of  the  state 
makes  it  necessary  to  seek  the  localities 
which  have  the 
best  water  sup- 
ply. There  are 
very  few  cattle 
in  the  large 
desert  counties  of 
Mohave  and 
Yuma.  Of  the 
entire  number  in 
the  state,  18% 
are  in  Yavapai 
County,  around 
Prescott,  at  the 
headwaters  of 
the  Hassayampa 
River.  Other 
important  dis- 
tricts are  in  the 
southeast,  in  Co- 
chise and  Gra- 
ham counties,  on  ^ 
the  Mexican  and 
New  Mexican 
borders.  Flag- 
staff is  the  center 
of  the  northern 
region,  which  is 
important  on  ac- 
count of  large 
government 
ranges.  Cattle  in 
the  north,  how- 
ever, have  been 
largely  displaced 
by  sheep.  Phoe- 
nix, on  the  Salt 
River,  is  the  beef 
marketing  and 
packing    center 

8] 


In  Nevada  the  cattle  region  most  dense- 
ly stocked  is  Elko  County,  at  the  north- 
eastern corner  of  the  state,  between  the 
headwaters  of  the  Humboldt  River  and 
close  to  the  Idaho  and  Utah  boundaries. 
Another  important  region  is  in  Humboldt 
County,  in  the  northwest,  on  the  Oregon 
line.  The  counties  immediately  bordering 
on  California  are  relatively  unimportant, 
although  the  irrigated  district  around  Car- 
son City  is  a  feeding  center  of  some 
importance 


ARIZONA 


Distribution  of  B««f  Cattle,  Census  of  1920 
1  dot=1000  head  of  Cattle 


0 


re- 
and 


Methods  of  Raising  Beef 

In  the  process  of  raising  and  fattening 
beef  cattle,  there  are  three  types  of  feed- 
ing. These  are  employed  in  rotation,  each 
at  its  appropriate  season  of  the  year.  The 
first  is  mountain  range  feeding,  beginning 
with  the  summer  months,  after  the  snow 
has  melted  and  green  grass  has  come  up. 
The  mountain  range  is  the  primary  breed- 
ing ground  of  the  cattle  and  the  place 
where  the  beef  crop  is  begun.  Wild  grass 
is  of  course  the  least  expensive  kind  of 
feed,  but  not  always  the  most  economical 
for  the  production  of  high-grade  beef,  un- 
less supplemented  by  other  kinds  of  fat- 
producing  feed.  Mountain  ranges  are 
found  extensively  in  the  northern  part  of 
California,  as  well  as  along  the  eastern 
boundary  of  the  state  toward  Nevada  and 
Arizona,  and  in  the  Coast  and  San  Ber- 
nardino Ranges.  There  are 
also  large  ranges  in  the 
gion  between  San  Diego 
the   Imperial   Valley. 

The  second  type  of  feeding 
is  known  as  valley  grass  for- 
age. As  the  winter  approaches 
the  herds  are  driven  down 
from  the  mountain  ranges 
into  the  valleys,  where  they 
are  fed  on  grass  freshened 
by  summer  rains.  It  is  the 
policy  of  stockmen  to  keep 
their  cattle  off  of  these  val- 
ley grass  pastures  during  the 
summer  so  that  the  feed  may 
be  preserved  for  winter.  In 
times  of  stress  like  the  pres- 
ent, however,  winter  reserves 
are  apt  to  be  used  up  during 
summer.  Stockmen,  holding 
their  cattle  for  higher  prices, 
try  to  feed  more  animals  than 
their  ranges  will  support 
When  the  summer  pasture  has 
been  exhausted,  the  tempta- 
tion is  to  turn  the  herds  into 
the  pastures  which  should  be 
kept  for  winter  use.  Such 
practices  may  bring  disastrous 
results  later  in  the  season. 
As  the  winter  approaches,  the 
owners  must  either  buy  grain 
or  other  dry  feed  on  the  mar- 
ket, at  high  winter  prices,  or 


sell  off  surplus  stock  for  beef  regardless 
of  their  condition  and  market  value.  Such 
a  situation  may  have  to  be  faced  this  win- 
ter in  Southern  Arizona,  where  failure  of 
pasture  on  account  of  the  spring  drouth 
forced  cattle  raisers  to  draw  heavily  upon 
their  winter  reserves. 

"Dry-lot  feeding"  is  the  final  process  in 
bringing  into  market  condition  those  cattle 
which  it  has  been  impossible  to  fatten  on 
grass.  This  type  of  feeding  is  usually  en- 
gaged in  by  intermediaries  called  "feed- 
ers," who  are  usually  independent  of  the 
stockmen  and  the  packers.  The  stock  rais- 
ers, running  their  herds  in  the  mountains 
in  summer  and  fattening  them  in  the  val- 
leys in  fall  and  winter,  usually  select 
those  ready  for  market  as  they  come  into 
condition  and  sell  them  for  beef,  retaining 
a  certain  percentage  for  reproductive  pur- 
poses, so  that  the  herds  may  be  perpetu- 


NEVADA 


Distribution  of  Beef 
Cattle,  Census  of  1920 

1  dot=1000  head  of  Cattle 


IT 


!l 


I 


'1 


ated.  Older  cows  and  steers  not  fat 
enough  for  market,  are  culled  out  and  sold 
to  feeders.  These  {inimals  of  course  do 
not  bring  as  much  per  pound  to  the  raisers 
as  do  fat  cattle,  but  it  is  often  more  eco- 
nomical to  pass  them  on  to  persons  en- 
gaged in  "priming"  than  to  put  them 
through  another  season  of  fattening  on  the 
range.  In  the  Middle  West  "feeder-cattle" 
are  primed  on  corn,  but  in  California  and 
Arizona  alfalfa  hay,  sugar  beet  tops  and 
pulp,  and  cotton-seed  meal  are  used.  These 
feeds  produce  a  grade  of  beef  not  far  in- 
ferior to  that  produced  by  com.  Naturally 
many  feed-lots  are  found  in  the  sugar  beet 
districts,  as  along  the  coast  near  Los  An- 
geles, where  sugar  producers  engage  in 
feeding  as  a  means  of  utilizing  surplus 
beet  tops  and  pulp.  Other  feeding  centers 
are  in  the  San  Joaquin  and  Imperial  Val- 
leys in  California  and  the  Salt  River  Val- 
ley in  Arizona,  in  proximity  to  the  large 
alfalfa  and  cotton  fields.  The  Salt  River 
and  Imperial  Valleys  are  doubly  im- 
portant as  feeding  districts,  for  the  reason 
that  they  have  both  valley  grass  pastures 
and  dry  feeding  lots,  where  cotton  hulls, 
cotton-seed  meal  and  alfalfa  hay  are  used. 

Grass  Range  States 

California,  Arizona  and  Nevada  are  pri- 
marily "grass-range"  states,  as  distin- 
guished from  the  corn-feeding  states  of  the 
great  Middle  West,  such  as  Iowa,  Kansas, 
Missouri  and  Nebraska.  In  these  moun- 
tain states  of  the  West  where  cattle  are  fed 
largely  on  natural  pasture,  many  arc 
sold  directly  from  the  range  to  the  packer. 
This  means  less  expensive  feeding  in  the 
long  run,  but  a  poorer  grade  of  beef  on 
the  whole,  and  a  longer  period  of  turn- 
over. The  corn  feeder  buys  grown  ani- 
mals, fattens  them  in  a  few  months,  and 
gets  his  money.  The  ranger  raises  his 
beef  from  calves,  runs  them  out  over  the 
mountains  while  growing,  and  sells  at  the 
end  of  from  3  to  5  years. 

The  range  method  of  raising  stock  in- 
volves the  uncertainty  of  climatic  condi- 
tions. In  extremely  severe  winters,  for 
instance,  cattle  on  the  open  range  will  die 
in  large  numbers,  and  in  summer  drouths 
the  death  rate  will  be  equally  high  from 
lack  of  feed  and  water.  The  winter  of 
1920  saw  an  average  for  the  United  States 
10] 


of  18.4  deaths  from  exposure  per  1000 
cattle.  For  the  comparatively  mild  winter 
of  1921  the  average  dropped  to  9.3  deaths 
per  1000  head  for  the  entire  country. 
Arizona,  however,  reported  more  losses 
from  exposure  in  1921  than  for  any  of  the 
past  10  years,  the  estimate  being  70  per 
1000,  compared  with  10  per  1000  in  Cal- 
ifornia and  16  per  1000  for  Nevada. 

A  comparison  of  figures  for  the  different 
cattle  raising  states  indicates  that  Arizona 
is  particularly  unfortunate  in  losses  from 
disease  and  exposure,  while  California  and 
Nevada  are  at  about  the  average.  The 
most  fortunate  states  are  those  of  the  Mid- 
dle West,  which  provide  shelter  for  their 
animals  and  which  do  not  have  to  depend 
upon  the  local  weather  conditions  for 
feed.  Arizona  also  suffers  heavily  from 
drouth,  as  it  has  done  this  year.  Pasturage 
on  July  1,  1921,  was  reported  by  the 
United  States  Department  of  Agriculture 
to  be  only  50%  normal  in  that  state,  as 
compared  with  86%  in  California  and 
101 7o  in  Nevada. 

Though  the  western  ranges  are  of  low 
carrying  capacity,  requiring  from  15  to  40 
acres  of  pasture  per  animal,  depending  up- 
on the  degree  of  rainfall,  the  much  great- 
er area  of  land  available  for  use  at  low 
cost  makes  up  for  the  small  production 
per  acre.  California,  Arizona  and  Nevada 
are  fortunate  in  possessing  large  tracts  of 
national  forest  reserve  pastures,  upon 
which  stockmen  are  permitted  by  the  gov- 
ernment to  graze  their  cattle  at  a  compara- 
tively small  rental,  usually  a  little  over 
SI. 00  per  head  a  year.  The  acreage  in  Na- 
tional Forest  Reserve  in  these  states,  with 
estimated  grazing  capacity  and  charges  per 
head  of  cattle,  is  shown  by  the  following 
table  for  1919: 


Yearly 

Charg* 
P«T  hMd 

$1.00 
1.30 
1.20 


AcTM  ia  Number  of 

SUU  Foremt  RcMinre     Cattle  Cntc4 

Arizona    11,154,923        343,425 

California   18,814,659        230,350 

Nevada    4.971335  87,735 

Total    34,940,917        661^10 

Cost  of  Production 

The  cost  of  raising  beef  cattle  varies 
with  the  cost  of  feed,  interest  rates  on  cat- 
tle paper,  and  the  price  of  labor.  The 
percentage  of  total  cost  represented  by 
each  one  of  these  factors  is  approximately 


■ 


as  follows,  under  typical  conditions  in  the 
Southwest : 

Feed 55-70% 

Interest  25-15% 

Labor 10-  5% 

The  feed  factor  is  subject  to  the  widest 
variations,  due  both  to  the  continual  fluc- 
tuation of  prices  of  hay  and  pasture,  and 
the  varying  climatic  conditions  which 
make  the  amount  of  feed  an  uncertain  ele- 
ment. The  cost  of  feed  is  therefore  not 
only  the  largest  factor  in  production  cost, 
but  it  is  a  variable  which  never  can  be  de- 
termined by  the  stockmen  beforehand. 
Consequently  he  must  take  long  chances. 
In  years  of  heavy  rainfall  and  favorable 
climatic  conditions,  he  may  be  able  to  fat- 
ten his  cattle  on  comparatively  cheap 
range  grass,  and  make  huge  profits.  In  a 
season  of  drouth  or  severe  blizzards  he 
may  lose  10%  of  his  animals,  and  be  put 
to  the  necessity  of  buying  expensive  hay 
to  fatten  or  save  those  remaining.  In 
such  a  case  he  would  have  to  sell  at  a 
price  below  cost  of  production  and  his 
losses  would  be  great. 

In  the  days  of  the  vast  areas  of  free 
ranges  good  profit  could  be  realized  on 
cattle.  The  only  uncertain  factors  were 
the  weather  and  the  selling  price  of  beef. 
The  comparatively  steady  demand  for 
meat  insured  a  fairly  stable  price  for  cat- 
tle, and  the  large  profits  in  good  years 
more  than  covered  losses  during  a  bad  win- 
ter. 

Free  pasture  has  rapidly  become  scarce, 
however,  with  the  reclamation  of  govern- 
ment land  for  agricultural  purposes,  and 
with  the  ever-increasing  competition  of 
sheep  raising,  as  an  additional  difficulty  to 
be  met.  True,  there  are  large  areas  of  gov- 
ernment forest  reserves  in  the  West  upon 
which  cattle  may  be  grazed  at  low  cost, 
but  the  figures  given  above  indicate  that  of 
1,229,000  cattle  in  the  state  of  California 
in  1919  only  230,000,  or  18.7%,  were 
given  grazing  permits  for  that  year. 

Other  ordinary  expenses  of  the  cattle 
raiser  have  increased  more  rapidly  than 
the  selling  price  of  beef.  He  must  now 
pay  higher  rent,  build  fences,  cultivate 
some  of  his  land  for  the  raising  of  hay, 
and  pay  more  for  his  foremen  and  cow- 
boys. The  problem  of  making  a  profit  on 
beef     under    modern     conditions    hinges 


largely  on  the  cost  of  hay  or  other  feed, 
as  has  been  stated.  This  is  even  more 
true  in  the  Northwest,  where  hay  must  be 
fed  during  the  months  when  snow  is  on 
the  ground.  Fortunately  large  irrigation 
projects  have  made  possible  the  raising  of 
large  quantities  of  alfalfa  hay  in  the  val- 
leys of  the  Southwest.  Alfalfa  is  a  high- 
grade  feed  for  fattening  cattle  and  cheaper 
than  corn.  But  even  hay  in  the  stack  costs 
something  (usually  about  $6.00  per  ton), 
and  the  price  soars  with  the  same  causes 
which  force  the  stockmen  to  buy  feed, 
namely,  failure  of  rains.  It  has  been  esti- 
mated that  in  parts  of  the  Southwest  30 
acres  of  pasture  and  one  ton  of  hay  are  re- 
quired to  keep  one  animal  one  year.  Ob- 
viously, with  cattle  selling  on  the  hoof  at 
6c  per  pound  and  alfalfa  hay  at  $6.00  per 
ton,  each  animal  must  increase  in  weight 
100  pounds  a  year  to  cover  the  cost  of  the 
hay  alone.  To  cover  the  rental  or  interest 
on  30  acres  of  summer  pasture,  pro-rata  of 
operating  expenses,  and  original  cost  of 
the  animal  as  a  calf,  it  must  put  on  an- 
other 100  or  150  pounds,  making  a  total 
gain  in  weight  of  200  to  250  pounds  per 
year,  which  stock  of  good  breed  will  just 
about  do  in  this  part  of  the  country.  In 
most  parts  of  Southern  California  stock- 
men attempt  to  bring  their  cattle  into  beef 
condition  without  the  use  of  hay  except  as 
a  last  resort.  This  requires  unusually  good 
pasture,  supporting  on  an  average  one  ani- 
mal for  every  nine  or  ten  acres,  and  favor- 
able weather  conditions.  Ranges  of  such 
capacity  are  valued  at  about  $20.00  per 
acre,  and  bring  from  $0.75  to  $1.25  per 
acre  rental. 

Methods  of  Computing  Cost 

Conditions  utider  which  cattle  are  raised 
in  the  Southwest  are  of  course  different  in 
different  localities.  Arizona,  for  example, 
is  largely  a  breeding  ground,  of  large  in- 
expensive ranges.  Southern  California,  on 
the  other  hand,  is  primarily  a  fattening 
district  of  small  individual  herds,  the  own- 
ers preferring  to  purchase  calves  from 
Arizona  and  Nevada  rather  than  to  pro- 
duce them  from  their  own  stock.  Plenty 
of  good  grass,  alfalfa  hay  and  available 
beet  and  cotton  fields  make  this  possible. 

Although  it  is  impossible  to  give  exact 
figures  showing  cost  of  cattle  production, 

[11 


r 


the  following  represent  to  a  fair  degree  the 
average  of  expenses  involved  in  a  normal 
year  in  Southern  California,  with  the  pos- 
sible profit: 

The  stockman  leases  a  range  of  9,000 
acres  at  75c  per  acre,  having  a  grazing 
capacity  of  9  acres  per  animal.  He  stocks 
this  with  1000  "weaners"  brought  in  from 
Northern  California,  Arizona  or  Nevada 
at  $20.00  per  head.  The  annual  loss  of 
calves,  due  to  disease  and  exposure  is  as- 
sumed to  be  2%,  a  fair  estimate  for  this 
region. 

HRST  YEAR: 

1000     calves     @     $20.00 $20,000.00 

Annual  loss  of  calves  due  to  exposure 

and  disease  2% 400.00 

Interest  @  8%  on  $20,000 1,600.00 

Rent  of  9000  acres  @  75c 6,750.00 

Labor  and  salt,  $1  per  animal 1,000.00 

Cost  of  raising  1000  calves  to  yearlings.  .$29,750.00 

Cost  each   $29.75 

Probable  selling  price  of  yearling 30.00 

Margin,  exclusive  of  owner's  salary  and 
equipment  .25 

Obviously,  the  cost  of  running  the  calves 
on  such  a  range  for  the  first  year  is  too 
high  to  allow  of  a  profit.  To  make  his 
cattle  pay  out  the  stock  raiser  must  hold 
them  another  year  or  two,  uptil  increase 
in  weight,  and  higher  quality  of  beef,  due 
to  the  addition  of  fat,  will  bring  a  higher 
price  per  pound  than  can  be  realized  from 
yearlings.  If  he  runs  them  through  a 
second  and  third  year,  the  expense  and 
possible  profit,  under  the  same  normal 
conditions,  would  be  approximately  as 
follows: 

SECOND  YEAR: 

Cost  of  1000  yearlings  to  date $29,750.00 

Annual    loss    due    to    exposure    and 

disease,  2% 595.00 

Interest  @  8%  on  $29,750.00 2,380.00 

Rent    of    9000    acres    at    ;5c 6,750.00 

Labor  and  salt,  $1.00  per  animal 1,000.00 

Cost  of  raising  1000  cattle  at  end  of 

second  year $40,475.00 

Cost  each   40.48 

Probable     selling     price,      800     lbs. 
@  6c 48.00 

Margin    (18%) $7.52 

121 


THIRD  YEAR: 

Cost   of   1000  cattle  to   date $40,475.00 

Annual    loss    due    to    exposure    and 

disease,  2% 809.50 

Interest  @  8%  on  $40,475.00 3,238.00 

Rent,    9000    acres     @     75c 6,750.00 

Labor  and  salt  $1.00  per  animal 1,000.00 

Cost  of  raising  1000  cattle  at  end  of 

third  year $52,272.50 

Cost  each   52.27 

Probable    selling    price,     1050     lbs. 
@  6c 63.00 

Margin    (20%) $  10.73 

If  the  owner  is  forced  to  hold  the  cat- 
tle a  fourth  year,  as  many  are  doing  now, 
in  the  hope  of  higher  prices,  the  margin 
of  profit  recedes  rapidly,  provided,  of 
course,  that  there  is  no  advance  in  the  price 
of  beef.  This  is  because  the  animals  do 
not  take  on  sufficient  additional  weight  dur- 
ing the  fourth  year  to  compensate  for  the 
increased  cost.  On  the  same  basis  and  un- 
der the  same  conditions  as  assumed  for  the 
first  three  years,  the  figures  at  the  end  of 
the  fourth  year  would  show  a  cost  of 
$65.25  per  animal,  against  a  probable  sell- 
ing price  of  $66.00.  Accordingly  the 
margin  of  profit  on  "four-year-olds"  un- 
der these  conditions  would  be  only  1%. 

Cattle  are  rarely  held  a  fifth  year,  ex- 
cept for  breeding  purposes.  From  the 
figures  above  the  reason  is  obvious:  the 
cumulative  cost  of  maintaining  a  beef 
steer  over  five  years  will  in  all  probability 
be  higher  than  the  price  he  will  bring  at 
the  end  of  that  time. 

Varying  Conditions 

The  above  figures  showing  cost  of  pro- 
duction should  not  be  taken  too  literally. 
Conditions  vary  so  widely  in  different  lo- 
calities and  in  different  years,  that  only 
sample  sets  of  conditions  can  be  offered. 
In  the  hypothetical  case  taken  above  the 
stock  raiser  did  not  own,  but  leased  his 
land,  and  paid  for  every  acre  of  it.  In- 
terest at  8^(  was  allowed  on  the  full  value 
of  his  cattle.  In  few  cases  would  a  breeder 
actually  be  paying  interest  on  full  value, 
for  the  reason  that  he  could  not  borrow 
to  that  extent.  But  if  he  borrows  to  the 
extent  of  only  75%  on  the  value  of  his 
stock,  the  remaining  25%  represents  his 
own  investment,  and  the  above  figures  as- 
sume that  he  is  to  be  allowed  usual  inter- 
est on  personal  funds  involved.  In  some 
cases  the  stockman  owns  a  few  hundred 
acres,    leases   auxiliary   pasture   during    a 


1 
I 


I 


•       • 


part  of  the  year,  and  perhaps  feeds  hay  or 
beet  tops  at  another  time.  In  Arizona 
and  parts  of  California  where  ranges  are 
contiguous  to  government  forest  reserves 
and  the  owner  controls  the  water  supply 
of  his  neighborhood,  he  is  allowed  graz- 
ing privileges  in  the  forest  range  at  a  very 
low  charge.  As  a  second  typical  set  of 
conditions  in  such  a  region,  say  in  the  vi- 
cinity of  Flagstaff,  Arizona,  we  might  take 
a  man  who  owns  a  range  worth  $5,000, 
utilizes  a  neighboring  forest  reserve  dur- 
ing six  months  of  the  year  at  50c  per  head, 
and  feeds  half  a  ton  of  hay  per  head  in 
the  winter.  He  stocks  his  range  with  1000 
cows  at  $45.00  and  40  bulls  at  $100  per 
head,  the  bulls  depreciating  one-half  of 
their  value  over  a  period  of  three  years. 
His  calf  crop  would  be  on  the  average 
70%,  and  his  annual  loss  by  disease  and 
exposure  3%.  It  may  be  assumed  that  he 
could  borrow  one-half  the  value  of  his 
cows,  $22,500.00,  for  stocking  and  inci- 
dental expenses.  If  the  computation  is 
carried  out,  it  may  be  seen  that  the  owner's 
actual  cost  per  calf  will  be  $12.50.  If  he 
can  ship  these  cattle  to  California  buyers 
at  $15.00  per  head  net,  obviously  he  can 
realize  a  profit  of  25%. 

Feeders 

In  the  neighborhood  of  Los  Angeles 
and  in  the  Imperial  and  parts  of  the  San 
Joaquin  Valley,  there  are  many  so-called 
"feeders,"  who  make  a  practice  of  buying 
full  grown  but  unfattened  steers  and  cows 
and  finishing  them  off  on  hay,  beet  tops, 
or  cottonseed  before  they  are  sold  to  the 
packer.  The  feeder,  of  course,  gambles 
on  the  cost  of  feeding  being  less  than  the 
increase  in  price  of  cattle  fed.  He  ex- 
pects not  only  to  produce  more  weight, 
but  so  to  fatten  each  animal  that  the  qual- 
ity of  meat  will  bring  a  higher  price  per 
pound,  usually  about  3c,  than  that  paid 
for  the  cattle  on  the  range. 

Whether  or  not  the  "feeder"  makes 
money  is  dependent  primarily  on  the  cost 
of  feed.  Some  animals  are  naturally  poor 
and  will  eat  40  pounds  of  expensive  hay 
per  day  and  gain  very  little;  other  better 
breeds  will  put  on  up  to  2  pounds  a  day 
with  the  same  amount  of  feed.  In  recent 
years  the  cost  of  hay  has  been  so  great 
around  Los  Angeles  that  this  type  of  feed- 
ing has  given  way  to  fattening  on  sugar 


beet  tops,  and  cottonseed  meal.  Sugar 
beet  growers  and  sugar  mills  engage  in 
feeding  principally  as  an  outlet  for  other- 
wise valueless  by-products,  and,  of  course, 
make  good  profit.  The  business  of  feed- 
ing, however,  unless  connected  with  some 
such  source  of  cheap  supplies,  is  a  highly 
speculative  one. 

Importance  of  Breeds 

It  has  been  shown  that  the  profit  to  be 
made  on  cattle  depends  much  upon  the 
amount  of  weight  that  can  be  added  to 
a  steer  by  the  expenditure  of  a  given 
amount  of  time  and  money.  In  this  con- 
nection the  matter  of  breeds  plays  an  im- 
portant part.  It  will  be  remembered 
that  in  the  early  days  of  cattle  raising  in 
the  Far  West,  when  land  was  free  and 
other  expenses  comparatively  low,  most  of 
the  cattle  of  this  region  were  "longhorns," 
which  had  migrated  into  Texas  from  Mex- 
ico. As  the  margin  of  profit  between  cost 
and  selling  price  became  narrower,  it  was 
realized  that  the  longhorn  ate  too  much 
for  the  amount  of  fat  produced.  Too  large 
a  percentage  of  the  animal  was  horn,  skin 
and  bones.  Since  that  time  stock  raisers 
of  the  country  have  given  more  and  more 
attention  to  stocking  their  ranges  with 
breeds  of  cattle  which  would  take  on  fat 
readily  and  dress  out  a  larger  percentage 
of  beef.  Nowadays  the  stockman  expects 
his  cattle  to  dress  from  55  to  60%  good 
meat,  whereas  45%  was  a  high  average 
with  the  old  longhorns.  In  the  Middle 
West,  and  even  in  the  Northwest,  results 
in  breeding  and  cross-breeding  have  been 
carried  to  a  degree  of  perfection  which 
probably  cannot  be  hoped  for  in  the 
Southwest  for  many  years,  if  ever.  Much 
attention  is  being  given  to  the  matter, 
however,  and  among  the  cattle  of  Arizona 
and  Southern  California  a  large  percent- 
age of  Herefords  and  Durhams  is  already 
found,  though  the  nearer  the  Mexican  line 
is  approached,  the  poorer,  as  a  rule,  the 
quality  of  stock  becomes.  The  California 
Cattlemen's  Association  foresees  that  the 
success  of  the  cattle  industry  in  this  state 
depends  greatly  upon  the  matter  of  devel- 
oping good  breeds,  and  is  bending  every 
effort  to  that  end.  There  is  some  disagree- 
ment as  to  breeds  best  suited  to  this  part 
of  the  country,  but  the  concensus  of  opin- 
ion  among  experienced   stockmen  is  that 

[13 


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In 


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Durham  cattle  ("Shorthorns")  fatten  into 
beef  more  quickly  than  others  and  are  the 
best  stock  for  valley  ranges,  while  the 
hardier  Herefords  are  better  rustlers  and 
will  maintain  themselves  more  satisfac- 
torily on  mountain  ranges. 

Abnormal  Production  Costs 

That  the  market  price  of  beef  cattle  is 
now  (August,  1921)  far  below  the  cost 
of  production  can  be  proved.  On  previous 
pages  of  this  report,  figures  are  given 
showing  that  under  normal  conditions, 
with  the  factors  of  expense  at  a  certain 
level  and  with  cattle  selling  f.o.b.  ranch 
at  7c  per  pound,  a  fair  margin  of  profit 
to  the  cattle  raiser  was  possible,  say  10%. 
The  important  factors  were  seen  to  be 
feed,  labor  and  interest  on  cattle  paper. 
The  following  figures  will  illustrate  the 
degree  to  which  these  factors  increased  in 
cost  from  the  pre-war  period  to  the  years 
1919  and  1920.  It  should  be  borne  in 
mind  that  it  was  during  these  latter  two 
years  that  cattle  now  ready  for  market 
were  raised.  p„^^„, 

Pra.war  of 

„       .  lerel  WW-JO  laereaM 

Feed,  alfalfa  hay $6.00        $12.00         100 

Crass    pasture    grazing 

fee   per   acre 75  1.25  66.6 

Feed-lot     charges     per 

day,  beet  sugar  tops, 

per  ton  basis 15  .60        300 

cottonseed  and  hulls, 

per  day 30  .55  83.3 

Labor,  wages  of  herders  30.00  90.00        200 

Interest  on  cattle  paper         8%  10%       25 

A  method  was  given  above,  with  quali- 
fications, for  estimating  the  cost  of  carry- 
ing cattle  through  the  second  and  third 
years  of  their  raising,  under  normal  con- 
ditions. Using  the  same  process,  and 
raising  the  expense  items  to  the  percentage 
of  increase  just  shown,  the  cost  of  raising 
the  three-year-old  cattle  now  on  the  mar- 
ket would  seem  to  have  been  approximate- 
ly $86.66  per  head.  The  present  market 
price  for  such  animals  is  $63.00  (1050 
pounds  at  6c  per  pound).  Obviously  the 
producer  is  now  facing  a  loss  of  $23.66 
per  head    (27.3%). 

Before  cattle  can  be  produced  at  a  profit 
again  in  this  part  of  the  country,  one  and 
probably  both  of  the  following  changes 
must  come  about:  (1)  A  decrease  in  the 
cost  of  production;  and  (2)  A  rise  in 
the  market  price  of  beef. 

Some  cost  factors  are  already  falling. 
Range  rental  has  declined  about  25%,  feed 
141 


yard  charges  30%,  and  labor  35%. 
Alfalfa  hay  is  back  almost  to  normal. 
But  interest  rates  still  remain  high,  with 
money  even  harder  to  obtain. 

When  the  beef  market  will  recover  is  a 
problem  that  all  cattlemen  are  trying  to 
solve.  They  believe  that  the  low  level  just 
reached  is  unwarranted  and  cannot  be 
maintained  long.  Consequently  the  ad- 
vices going  out  from  the  California  Cattle- 
men's Association  and  other  friends  of  the 
stockmen  are  to  hold  for  better  prices. 
Most  of  them  are  in  need  of  funds  for 
common  living  expenses,  however,  and 
must  sell  at  any  price. 

Market   Hindrances 

Apparently  the  packers  are  selling 
dressed  beef  at  only  a  legitimate  profit 
above  cost.  The  ratio  between  prices  paid 
by  them  for  cattle  on  the  hoof  and  prices 
at  which  they  sell  dressed  beef  to  the 
butchers,  is  only  slightly  higher  than  be- 
fore the  war,  and  the  difference  may  be 
accounted  for  by  the  enormous  decline  in 
the  price  of  by-products,  a  source  from 
which  the  packer  ordinarily  expects  to 
cover  overhead  expenses. 

Producers  and  packers  agree  in  the  be- 
lief that  retail  butchers  are  doing  much  to 
delay  recovery  of  the  beef  raising  indus- 
try by  exhorbitant  charges  for  meat  over 
the  counter.  Good  meat  is  made  to  re- 
main an  expensive  luxury,  and  the  masses 
will  not  buy  it.  Demand  and  consumption 
decrease  and  the  market  lags. 

A  beef  when  slaughtered  dresses  out 
at  about  50%.  Therefore  a  1000-pound 
steer  would  furnish  500  pounds  of  beef, 
for  which  the  butcher  would  have  to  pay 
$67.50  at  the  present  price   (13Voc  lb.). 

From  the  following  table  the  maximum 

gross  profit  which  may  be  realized  from 

the    sale    of    a    beef    carcass    at    present 

prices  may  be  calculated: 

COST,    1    beef   car- 
cass, 500   lbs.  (^ 

13%c    167.50 

SELLINC  PRICE: 
Porterhouse     and 

club  steaks 35  lbs.  (n}  55c  $19.25 

Sirloin  steaks 40     "     (fi]  43c     17.20 

Rib  roasts 45     "     @  40c     18.00 

Round  and  chuck 

steaks  and  rump 

roasts   175    "     @  35c    61.25 

Boiling  meat  and 

miscel 205     "     @    8c     16.40 

Total    500  lbs.  $132.10 

Gross   profit    (95.7*7r )    on    cost   price    64.60 


The  retail  prices  given  were  obtained 
by  personal  inquiry  of  six  representative 
butcher  shops  in  various  parts  of  Los 
Angeles.  The  scale  of  proportionate 
weights  is  that  recognized  by  packers  and 
published  in  Swift  &  Company's  year  book 
for  1920. 

It  would  appear  from  these  figures  that 
at  current  prices  butchers  in  this  vicinity 
can,  with  efficient  cutting,  make  about 
$64.60  gross  on  each  carcass.  To  arrive 
at  net  profits  it  is,  of  course,  necessary 
to  subtract  operating  expenses.  For  this 
purpose  we  may  take  the  shop  which  sells 
one  carcass  per  day. 

Investigation  indicates  that  cutters  are 
paid  about  $6.50  per  day.  One  cutter  can 
handle  one  carcass  per  day.  Rent,  ice  and 
delivery  expenses  may  run  as  high  as 
$11.00  per  day.  If  all  of  these  expenses 
are  charged  to  beef  sales  alone  (beef  con- 
stitutes about  38%  of  all  meat  sold)  there 
would  be  a  total  of  $17.50  per  day  to  be 
deducted  from  the  gross  profit  of  $64.60. 


50^    ^y*  '}^  ^'^7   'y '^|>    J     f 


For  the  shop  handling  one  carcass  per  day, 
therefore,  the  net  profit  would  be  $47.10 
per  day  or  per  carcass,  which  is  35.7% 
net  if  figured  on  the  selling  price  of  the 
carcass,  or  68.7%  if  calculated  on  cost 
price.  Average  retail  meat  shops  handle 
from  four  to  five  carcasses  per  week. 
Large  dealers  handle  up  to  five  and  ten 
per  day. 

While  these  profits  seem  unjustifiably 
high,  retail  meat  dealers  contend  that  in 
actual  practice  their  net  profits  on  all 
meat  sales  are  considerably  less  than  they 
appear  in  theory.  It  is  said  that  at  pres- 
ent pork  sales  often  show  a  net  loss,  which 
must  be  counterbalanced  by  additional 
profits  on  beef.  Butchers  claim  also  that 
due  to  the  insistence  of  housewives  on 
small,  choice  cuts,  considerable  waste  is 
experienced  in  trimming.  They  assert  that 
they  experience  considerable  loss  from 
shrinkage  due  to  the  necessity  of  keeping 
meal  in  storage  because  there  is  not  a  uni- 
form demand  for  all  cuts  from  a  given 
J A^    SO      NDJ      PMAMJ      J     1 


SvpartiMat  of  Rassarcb  A  Sanric*  Sacurit/  Tnict  ft  Sarii^t  Bank 

CHART  No.  I 
Comparative  Trends  of  Retail  Meat  Prices,  Wholesale  Meat  Prices  and  Range  Cattle  Prices,  1914-1921 

(Scale  is  arranged  logarithmically  to  reflect  relative  changes) 

[15 


I 


m 


I 


i 


V\ 


carcass.  It  is  also  contended  that  few 
cutters  are  sufficiently  skillful  to  cut  out 
of  a  carcass  the  percentage  of  good  meat 
shown  to  be  possible  by  Swift  &  Com- 
pany's scale,  indicated  above. 

Whatever  the  facts,  examination  of  the 
records  of  R.  G.  Dun  &  Co.  reveals  that 
there  have  been  no  failures  among  Los 
Angeles  meat  dealers  in  the  past  year. 

Marketing  and  Packing 

The  marketing  of  beef  in  the  Southwest 
is  done  either  by  local  butchers,  or 
through  packing-houses  at  the  main  cen- 
ters of  population.  In  California  con- 
sumption of  beef  so  nearly  equals  pro- 
duction that  the  packer's  task  is  largely 
one  of  local  distribution. 

Although  there  are  stockyards  for  the 
assembling  and  distribution  of  cattle  at 
Denver,  Colo.,  and  at  Portland  and 
Seattle  in  the  Northwest,  they  are  un- 
known in  the  Southwest.  Cattle  ap- 
parently ready  for  market  are  shipped 
to  the  meat  centers  and  sold  directly 
to  packers  for  slaughtering,  or  if  not 
in  killing  condition  on  arrival,  are  sold 
to  dry-lot  feeders  in  the  vicinity,  who 
fatten  the  animals  on  alfalfa  hay  or  beet 
tops  for  a  few  months,  and  then  turn  them 
over  to  the  packers. 

It  is  claimed  by  many  that  the  mar- 
keting of  beef  in  this  region  is  handi- 
capped by  the  absence  of  a  union  stock- 
yards with  improved  packing  and  canning 
equipment,  at  some  such  center  as  Los  An- 
geles. There  is  no  central  point  at  pres- 
ent to  which  cattle  may  be  shipped  for 
segregation  into  "feeders"  and  "market 
fat."  Consequently  it  is  contended  that 
stockmen  are  much  at  the  mercy  of  the 
buyers,  who  are  usually  agents  of  the 
packers.  In  the  absence  of  a  central  cat- 
tle market,  these  men  go  out  to  the  ranges 
and  drive  their  bargains  with  the  individ- 
ual raisers,  who  are  often  ignorant  of 
prices  and  general  market  conditions.  The 
buyers  will  select  the  best  of  the  herd  and 
leave  the  ranger  with  a  poor  grade  of  cat- 
tle on  hand.  Many  of  these  rejected  ani- 
mals will  be  shipped  down  to  feed-lots 
in  the  valleys  and  at  the  packing  centers. 
Among  them  will  be  old  cows  and  runty 
steers  which  could  not  be  fattened  by 
even  the  most  expensive  dry- lot  feeding. 
If  there  existed  stockyards  for  proper  seg- 
161 


regation,  with  well-equipped  packing  es- 
tablishments close  at  hand,  these  poorer 
animals  could  be  culled  out  and  slaughtered 
inunediately  as  "canners."  This  would 
prevent  the  waste  of  much  good  feed. 

It  is  thought  by  some  that  a  union 
stockyards  would  do  much  to  break  the 
power  of  large  buyers  who  are  now  able 
to  "bear"  prices  to  a  certain  extent  through 
the  inability  of  shippers  to  find  a  competi- 
tive market  for  their  offerings. 

On  the  other  hand  some  of  the  largest 
cattlemen  do  not  favor  the  establishment 
of  stockyards,  claiming  that  through  them 
the  packers  would  secure  even  a  stronger 
hold  on  the  market.  One  of  our  largest 
producers  in  the  South,  Mr.  Fred  Bixby  of 
Long  Beach,  is  at  present  opposing  a  plan 
of  the  Los  Angeles  Chamber  of  Commerce 
to  have  a  union  stockyards  established  at 
this  center.  Mr.  Bixby,  an  ex-president 
of  the  California  Cattlemen's  Association, 
contends  that  such  stockyards  would  fall 
into  the  control  of  the  large  packers  and 
become  a  means  of  dictating  prices  to  the 
producer.  With  the  beef  crop  of  the  state 
regularly  gathered  into  stockyards,  Mr. 
Bixby  declares,  the  supply  would  be  deter- 
mined easily  at  the  beginning  of  each 
market  day,  and  whenever  a  surplus  be- 
came apparent,  interleagued  packers  could 
force  owners  to  accept  whatever  they 
pleased  to  offer.  Freight  charges  would 
make  impossible  the  shipment  of  stock  to 
other  markets  and  high  feed  charges  at  the 
stockyards  would  make  it  unprofitable  to 
hold  for  better  prices.  Mr.  Bixby  also 
contends  that  there  is  no  market  for  Cal- 
ifornia beef  other  than  for  local  consump- 
tion, and  therefore  no  need  of  concentrat- 
ing cattle  for  shipment  out  of  the  state. 

Though  cattle  are  slaughtered  and  sold 
by  butchers  in  even  the  smallest  towns,  the 
chief  beef  marketing  centers  of  this  region, 
south  of  San  Francisco  and  Ogden,  and 
west  of  Denver,  are  Los  Angeles  and 
Phoenix.  Los  Angeles  handles  about  five 
times  as  many  cattle  annually  as  Phoenix, 
and  slightly  outranks  her  nearest  rival  in 
the  West,  San  Francisco.  The  demands  of 
the  San  Francisco  market  are  augmented 
by  the  regular  purchases  of  the  naval 
supply  base  at  Mare  Island,  amounting  to 
some  20,000  head  per  annum.  There  are 
other  minor  packing  centers  in  the  San 


Joaquin  Valley  and  along  the  coast  of 
Soutfiern  California,  but  these  are  rela- 
tively unimportant  except  for  supplying 
local  demands. 

The  following  figures,  most  of  them 
obtained  from  reliable  sources,  are  be- 
lieved to  be  fairly  accurate  estimates  of 
cattle  slaughtered  in  cities  of  the  Southwest, 
with  a  comparative  figure  for  San  Fran- 
cisco: 

Skufhter  of  Cattle 
and  CaWet 
1920 

Lo8  Angeles,   including  Vernon  154,056  head 

Phoenix,  Ariz. 30,318 

Pomona    6,705 

San  Diego   10,000 

Anaheim     6,800 

Santa    Barbara 3,000 

Fresno    1,950 

212,829 
San   Francisco 126,321 

The  slaughter  for  the  state  of  California 
during  1920  was  495,167  cattle  and 
86,044  calves,  or  a  total  of  581,211  head. 

Packing  at  Los  Angeles  is  largely  in  the 
hands  of  six  large  concerns,  two  of  which 
(Cudahy  &  Company  and  Wilson  &  Com- 
pany) are  local  establishments  of  members 
of  the  so-called  "Big  Five"  at  Chicago. 
The  large  independent  companies  are  the 
Hauser  Packing  Company,  the  California 
Dressed  Beef  Company,  the  Standard 
Packing  Company  and  the  New  Market 
Company. 

The  packing-houses  of  Los  Angeles 
draw  cattle  from  the  entire  southern  part 
of  the  state,  as  well  as  from  the  coast 
ranges  as  far  north  as  Monterey  County, 
and  from  the  San  Joaquin  Valley  south  of 
Stockton.  In  the  more  northerly  districts 
Los  Angeles  buyers  come  into  competition 
with  buyers  from  San  Francisco,  either 
overbidding  or  underbidding  each  other 
according  to  price  quotations  at  their  re- 
spective bases.  Because  of  the  slight  sur- 
plus shipped  East  every  year  (averaging 
about  25,000  head),  Los  Angeles  buyers, 
with  the  shorter  rail  distance  to  the  Middle 
West  packing  centers  of  St.  Joseph,  Kansas 
City  and  St.  Louis,  ordinarily  have  the  ad- 
vantage. 

Besides  the  slaughter  of  cattle  produced 
in  the  southern  part  of  California,  the 
packers  of  Los  Angeles  kill  large  supplies 
drawn  from  Arizona,  Utah,  Idaho,  Texas 
and  Nevada.     Of  94,665  head  shipped  to 


California  abattoirs  from  these  and  other 
states  last  winter,  Los  Angeles  took  48,575, 
or  51%,  while  34,754,  or  37%,  went  to 
San  Francisco.  It  should  be  stated  that 
the  total  for  last  year  was  considerably 
above  the  seasonal  average.  During  Feb- 
ruary, 1921,  there  occurred  the  unusual 
phenomenon  of  a  higher  price  for  cattle 
on  the  Pacific  Coast  than  at  Chicago,  with 
resulting  heavy  importations. 

Prices 

The  outbreak  of  the  war  in  1914  saw 
the  almost  immediate  rise  in  beef  prices 
in  this  country.  The  uptrend  was  at  first 
gradual,  but  became  increasingly  steeper. 
To  meet  the  enormous  demand  of  the 
European  countries  for  beef,  and  with  the 
supplies  of  India,  Australia  and  Russia 
cut  off,  the  United  States,  Argentina  and 
Canada  were  called  upon  greatly  to  in- 
crease production.  The  producers  of 
America,  stimulated  by  propaganda  of 
the  Food  Administration,  and  probably 
even  as  much  by  soaring  prices,  rose  to 
meet  the  emergency.  Our  exports  of  beef 
increased  tremendously.  A  shortage  was 
created  in  this  country  and  prices  ad- 
vanced rapidly,  until  they  reached  a  peak 
in  July,  1918,  of  lie  per  pound,  83% 
above  the  pre-war  level  of  6c.  The  end 
of  the  war  saw  some  hesitation  in  the 
market,  with  prices  holding  fairly  even  at 
10c.  But  the  expected  deflation  was  not 
yet  to  come.  Export  demands  continued 
and  during  the  period  of  extravagance  in 
the  country  the  public  insisted  upon  plenty 
of  everything,  at  any  cost. 

Prices  advanced  again  until  they  reached 
their  highest  peak  of  12c  in  March,  1920, 
100%  above  normal.  Such  prices  were 
enjoyed  by  the  stockmen  only  for  a  short 
time,  however,  when  the  long-feared  but 
unprovided-for  deflation  began  in  April. 
From  then  until  within  the  past  few 
weeks  the  curve  has  been  steadilv  down- 
ward, reaching  the  pre-war  level  in  June, 
1921,    and    dropping    below    it    in    July. 

At  this  date,  August  1 5th,  a  slight  recov- 
ery in  beef  prices  is  noticeable  at  Chicago, 
though  the  market  at  Los  Angeles  is  as 
yet  unchanged. 

Various  factors  have  combined  to  force 
the  rapid  decline  of  beef  prices.  First 
came  a  reaction  by  the  public,  consequent 

[17 


r 


to  the  era  of  heedless  extravagance  in  this 
country.  People  began  to  buy  smaller  cuts 
of  meat  and  fewer  of  them.  Exports  fell 
away,  declining  from  6,023,338  pounds  of 
fresh  beef  exported  from  the  United  States 
in  March,  1920,  to  508,230  pounds  exported 
in  March,  1921.  The  accumulations  of 
overproduction  were  thrown  upon  the 
market,  the  speculative  element  collapsed, 
and  the  ever-steadying  by-product  market 
disappeared.  Cattle  loan  associations 
which  had  advanced  large  amounts  of 
money  to  cattlemen  demanded  liquidation 
and  settlement,  and  more  cattle  were 
thrown  on  to  a  badly  overflooded  market, 
until  the  price  was  forced  down  to  below 
cost  of  production. 

Figures  showing  the  relative  decrease 
in  farm  prices  of  beef  cattle  in  each  of 
the  important  cattle  states  of  the  country, 
published  by  the  United  States  Depart- 
ment of  Agriculture,  are  of  interest  in  de- 
termining which  of  the  cattle  states  have 
suffered  the  most  radical  price  recessions. 
An  examination  of  these  figures  would 
show  that  the  greatest  declines  for  the  pe- 
riod ending  May  were  experienced  in  Illi- 
nois and  Kansas,  where  the  farm  value  of 
cattle  dropped  from  about  $10.00  to  $6.20 
per  100  pounds,  or  nearly  40%.  The  aver- 
age decline  for  the  country  as  a  whole  was 
33%.  In  California  the  recession  was  a 
little  under  the  average,  32.3%,  while 
South  Dakota  and  Arizona  seem  to  have 
been  the  most  fortunate  of  the  states  in 
the  matter  of  prices,  suffering  declines  of 
only  20.6%  and  22.2%,  respectively,  up 
to  May  of  this  year. 

Dedine  of  By-Product  Prices 

It  has  been  stated  that  one  of  the  causes 
of  decline  in  cattle  prices  has  been  the 
drop  in  by-product  values.  This  has  been 
especially  true  in  the  case  of  hides,  and 
it  goes  a  long  way  in  explaining  why  the 
packer  was  not  able  to  pay  more  for  cat- 
tle on  the  hoof  this  spring,  with  his  sell- 
ing price  of  dressed  beef  at  15%c,  than  he 
paid  in  1913,  with  dressed  beef  at  12%c. 
It  should  be  understood  that  the  packer 
ordinarily  depends  upon  the  value  of  by- 
products to  pay  more  than  the  cost  of 
dressing.  The  normal  cost  of  slaughtering 
and  dressing  a  beef  is  about  10%  of  its 
value.  Upon  an  $80.00  steer  it  would  be 
181 


therefore  about  $8.00.  Hie  usual  value 
of  by-products  (hides,  oflFal  and  fat) 
from  such  an  animal  is  about  $15.00.  Ac- 
cordingly in  ordinary  times  when  paying 
S80.00  for  a  steer,  the  packer  deducts 
$7.00  as  by-product  values  over  and  above 
cost  of  slaughtering,  and  reckons  $73.00  as 
his  cost  price  of  the  beef  dressed.  At  pres- 
ent, due  to  the  low  level  of  by-products, 
he  is  unable  to  deduct  anything,  but  must 
add  about  $2.00  for  cost  of  dressing,  over 
and  above  the  amount  he  can  realize  from 
the  sale  of  by-products. 

Hides,  which  are  the  most  valuable  by- 
products from  cattle,  brought  about  15c 
per  pound  before  the  war.  At  the  end  of 
1919  the  price  went  up  to  over  30c  per 
pound  (green  hides,  California  steers), 
and  during  the  spring  of  1921  declined  to 
about  5c  per  pound.  Other  less  im- 
portant by-products  declined  in  value  as 
well.  The  price  of  edible  tallow  dropped 
467c,  from  1234c  per  pound  in  1920  to 
6%c  in  1921.  Oleo  stearine  declined 
from  1314c  to  934c  (25%),  fertilizer 
(dried  blood)  from  $8.20  to  $2.55  (89%) 
per  unit,  and  tankage  from  $7.12^^  to 
$2,371/2  (67%),  during  the  same  period. 

Obviously,  with  the  decline  of  by-prod- 
uct values,  the  spread  between  packers* 
buying  prices  and  selling  prices  became 
greater.  Through  the  courtesy  of  two  of 
the  largest  packing  establishments  in  Los 
Angeles,  it  has  been  possible  to  gather 
figures  showing  the  changing  relation  be- 
tween the  cost  of  steers  to  the  packer  and 
his  selling  price,  during  the  past  nine 
years.  The  following  selections  from  the 
table  are  typical: 


Packers 

Baring 

Price 


Packer* 

SelUac 
Price 

i2y4c 

14 

17% 
15% 


Prieeef 
Ridee  oa 
Spread     Same  Date 

15c 
20 
31 
8 


70% 
65 
51 
110 


Date 

1913  7%c 

1917  8H 

1919  (Sept.)  11% 
1921    (May)     7% 

It  will  be  seen  that  in  1913  when  pack- 
ers were  paying  7l^c  per  pound  for  cat- 
tle delivered,  and  hides  were  at  15c,  they 
were  selling  dressed  beef  at  12%c.  This 
allowed  a  margin  of  70%  to  cover  wastage 
and  profit.  At  the  end  of  1919,  when 
hides  reached  their  highest  point,  beef 
which  cost  the  packer  ll%c  on  the  hoof, 
was  sold  at  17%c  when  dressed,  a  mar- 
gin of  only  51%.  Examining  the  figures 
for  recent  months,  it  appears  that  in  May, 


1921,  when  the  cost  of  cattle  to  the  packer 
was  7^c  per  pound  (the  same  as  in  1913), 
and  hides  were  below  8c,  the  selling  price 
of  dressed  beef  for  the  same  date  was 
15%c.  The  margin  in  this  case  was  110%, 
compared  with  one  of  70%  in  1913. 
Plainly  the  price  of  hides  at  any  given  time 
has  a  direct  effect  upon  the  relation  be- 
tween cattle  and  dressed  meat  prices. 

That  the  difference  between  packers' 
buying  and  selling  prices  varies  inversely 
with  the  price  of  hides,  is  clearly  shown 
by  the  accompanying  Chart  No.  II.  As 
the  price  of  hides  gradually  declined  from 
1919,  the  trend  of  difference  between  cost 
and  selling  price  was  upward.  Soon  after 
the  hide  market  reached  its  lowest  point 
in  1921,  that  difference  reached  its  peak. 
Despite  the  influence  of  receding  by- 
product values,  the  trend  of  wholesale 
beef  prices  has  followed  closely  the  price 
of  cattle  on  the  hoof.  Wholesale  beef 
prices  went  up  with  cattle  prices  in  1918, 


and  every  decline  in  cattle  prices  since  has 
been  reflected  promptly  in  wholesale  quo- 
tations. The  fact  that  the  percentage  of 
decline  during  the  last  few  months  has 
been  less  is  accounted  for  by  the  low  value 
of  by-products.  Chart  No.  I,  which  is 
sympathy  which  has  existed  between  range 
presented  on  Page  15,  illustrates  the 
caltle  prices  and  packers'  selling  prices, 
respectively,  and  seems  to  corroborate  the 
contention  of  packers  that  they  are  not  re- 
sponsible for  the  present  high  prices  of 
meat. 

Butchers  in  Los  Angeles  make  the  as- 
sertion that  certain  cuts  of  beef  can  be 
had  at  their  shops  more  cheaply  today 
than  they  could  be  purchased  before  the 
war.  This  is  true  of  the  cheaper  cuts,  such 
as  boiling  meat.  An  examination  of  pe- 
riodical price  quotations  advertised  by  the 
butchers  during  the  war  period  and  down 
to  date,  reveals  the  fact  that  whenever  the 
good  cuts  of  beef  went  up  in   price,  the 


1919 

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CHART  No.  II 
(A)  Percentage  of  Difference  Between  Cattle  Prices  and  Wholesale  Beef  Prices 
(B)  Value  of  Hides  During  the  Same  Period 


[19 


cheaper  cuts  went  down.  The  two  curves 
representing  the  respective  price  trends 
form  a  somewhat  symmetrical  figure.  The 
high  points  in  the  curve  representing 
steaks  and  roasts  are  opposite  the  low 
points  in  the  curves  depicting  pot  roast 
and  boiling  meat  prices.  The  reason  is 
obvious:  people  developed  extravagant 
teistes  during  the  war  and  the  aftermath 
period,  and  many  still  demand  the  choice 
cuts.  The  modern  housewife  does  not  find 
time  to  cook  roasts  and  boiled  meats, 
though  these  in  fact  have  a  higher  food 
value  than  do  steaks  and  chops.  Seventy- 
five  per  cent  of  a  beef  carcass,  however, 
is  of  these  cheaper  cuts  of  meat.  They 
must  be  disposed  of  in  some  manner,  and 
the  butcher  reduces  their  selling  price  in 
proportion  to  the  rise  in  demand  (and 
price)  of  the  more  popular  cuts.  The  re- 
sult is  that  at  present  boiling  meat  and 
pot  roasts  can  be  had  at  from  5  to  10c 
per  pound,  while  porterhouse  and  club 
steaks  average  about  65c. 

On  the  whole,  retail  prices  are  still  32% 
above  normal,  though  they  have  declined 
some  37%   since  the  peak  of  July,  1920. 


Meanwhile  range  cattle  prices  declined 
50%,  to  a  point  below  normal,  and  whole- 
sale prices  declined  34%,  to  a  point  only 
6%  above  that  of  1914,  in  spite  of  the  low 
value  of  by-products.  Clearly  retail  meat 
prices  have  not  been  keeping  pace  with  cat- 
tle and  wholesale  prices  in  the  long-awaited 
recession.  It  is  true,  however,  that  retail 
prices  reached  their  highest  point  two  to 
three  months  later  than  cattlemen  began 
to  receive  their  top  prices,  and  this  may 
be  the  basis  of  a  hopeful  prediction  that 
retail  prices  are  merely  delaying  the  drop 
accordingly. 

Financing  the  Cattle  Industry 

The  cattle  industry  is  financed  both  by 
banks,  which  make  loans  directly  to  stock 
raisers,  and  by  privately-operated  loan  as- 
sociations, which  purchase  and  endorse 
cattle  paper  for  rediscount  through  the 
banks.  A  cattle  loan  is  secured  by  the 
promissory  note  of  the  borrower,  together 
with  a  chattel  mortgage  on  his  livestock 
and  equipment,  and  sometimes  by  a  mort- 
gage on  his  real  estate. 


10^ 
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20] 


CHART  No.  Ill 
Showing  (A)  Seasonal  Price  Variations  in  Cattle  Prices  for  the  Ten-Year  Average,  1911-1920 

(B)     Price  Variations  for  the  Year  1920 


. 


In  the  stock  raising  regions  of  the 
Middle  West,  financing  through  loan  asso- 
ciations is  undertaken  extensively  by  large 
packing  companies,  who  are  interested  in 
keeping  the  industry  in  a  heallhy  condition 
to  the  end  that  there  may  be  a  steady 
flow  of  livestock  to  the  packing-houses.  In 
Southern  California  and  Western  Arizona 
cattle  loan  associations  have  only  recently 
appeared.  Cattlemen  have  heretofore  re- 
lied almost  entirely  upon  bank  loans  and 
upon  money  advanced  by  private  individ- 
uals. In  the  southeast  region  of  Arizona, 
where  cattle  raising  is  most  intense  in  that 
state,  stockmen  have  been  financed  by  loan 
associations  operating  from  the  Middle 
West  packing  centers.  Most  of  these  com- 
panies are  controlled  by  packing  interests. 

In  the  past  few  years  a  comparatively 
small  number  of  cattle  loan  associations 
have  begun  business  in  Southern  Califor- 
nia, with  offices  at  Los  Angeles.  Most  of 
them  are  closely  allied  with  packing  inter- 
ests. Only  one  of  the  number  has  thus 
far  handled  a  considerable  volume  of  busi- 
ness. 

These  cattle  loan  associations  have  come 
into  existence  mainly  on  account  of  the 
difficulties  experienced  by  cattlemen  in  se- 
curing bank  loans.  Banks  have  been 
proverbially  cautious  in  accepting  cattle 
paper.  Livestock  security  is  necessarily  of 
changing  value,  inspection  is  difficult  and 
expensive,  renewals  are  usually  requested, 
and  enterprises  too  often  of  a  speculative 
nature. 

Interest  of  Packers  in  Loan 
Associations 

Meat-packing  companies,  however,  are 
vitally  interested  in  the  maintenance  of 
steady  production  of  cattle  on  the  ranges 
and  the  fattening  of  beef  by  feed  yard  op- 
erators. They  have,  therefore,  encouraged 
and  assisted  the  incorporation  of  cattle 
loan  associations  in  stock  raising  centers, 
for  the  better  financing  of  the  industry. 
These  associations  on  the  whole  develop 
highly  efficient  organizations.  The  officers 
ordinarily  include  practical  cattlemen  and 
experienced  livestock  buyers,  who  are 
familiar  with  every  angle  of  die  industry. 
Stockmen  actively  engaged  in  raising  cat- 
tle are  made  managing  directors,  inspectors 
are  appointed  in  the  range  districts,  and 


accurate  records  of  pasturage  and  weather 
conditions,  quality  of  breeds,  and  preva- 
lence of  disease  are  collected,  with  other  in- 
formation of  interest  to  the  business. 
Through  such  organizations  cattle  loan  as- 
sociations are  equipped  to  render  valuable 
service  both  to  cattlemen  and  to  the  com- 
munity which  is  interested  in  the  sound 
development  of  the  livestock  industry. 

One  danger  in  extensive  financing  by 
cattle  loan  associations,  however,  lies  in 
the  tendency  on  the  part  of  some  of  these 
institutions  to  advance  money  too  liberally, 
sometimes  on  full  value  of  cattle  security, 
in  order  to  "boost"  the  business.  Such 
practices  result  in  disaster  to  borrowers 
and  cause  instability  in  the  market  when 
risky  loans  are  called  in  before  stock  can 
be  profitably  disposed  of.  Unhappy  re- 
sults of  this  kind  are  being  experienced  at 
present,  because  cattlemen  are  forced  to 
liquidate  in  a  depressed  market  heavy  bor- 
rowings made  during  the  period  of  in- 
flated values.  Another  element  of  danger 
in  loan  association  finance  is  said  to  exist 
in  the  opportunity  which  is  aff"orded  the 
packers,  through  their  control  of  such  com- 
panies, to  keep  borrowing  stockmen  in 
their  power.  The  cattle  industry  is  ordi- 
narily operated  on  a  large  scale.  The 
cattleman  must  make  heavy  borrowings 
for  the  purchase  of  stock  and  the  payment 
of  running  expenses.  If  banks  are  pre- 
vented by  legal  restrictions  or  by  cautious 
boards  of  directors  from  advancing  the  re- 
quired funds,  the  stock  raiser  is  dependent 
upon  the  loan  associations,  and  conse- 
quently upon  the  packers  who  financially 
underwrite  these  associations.  If  he  bor- 
rows funds  for  the  purchase  of  stock  or 
feed,  and  is  caught  at  maturity  of  the 
loan  with  a  dull  market,  it  is  to  his  interest 
to  hold  for  higher  prices.  The  market 
may  be  below  his  cost  of  production,  in 
which  case  liquidation  would  mean  an 
actual  loss.  In  such  a  case  the  packer 
controlling  the  association  which  advanced 
the  loan,  could  demand  immediate  pay- 
ment, and  perhaps  foreclose  on  the  mort- 
gage, either  bidding  in  the  cattle  at  a  low 
price  or  forcing  their  sale  on  a  depressed 
market. 

It  is  believed,  however,  that  such  prac- 
tices on  the  part  of  packers  are  exceed- 
ingly rare.  Accusations  come  mostly  from 
disgruntled     breeders     or     feeders     who, 

[21 


through  mismanagement  or  speculation, 
have  not  been  able  either  to  meet  their  ob- 
ligations within  a  reasonable  length  of 
lime  or  to  show  prospects  of  ever  paying 
out.  Packers  are  more  interested  in  main- 
taining a  constant  and  stable  market  than 
in  realizing  occasional  profits  by  forced 
sales,  and  it  is  to  be  doubted  that  they 
often  use  their  financial  control  over  stock- 
men to  force  down  cattle  prices. 

How  Loans  are  Made 

The  method  of  making  loans  to  cattle- 
men by  banks  and  loan  associations  is 
J  ,  fairly  uniform.  The  prospective  borrower 
^  files  a  written  application,  accompanied 
by  a  sworn  statement  of  his  financial  con- 
dition. The  statement  includes  a  descrip- 
tion of  the  stock  which  he  proposes  to  of- 
fer as  collateral,  his  facilities  for  taking 
care  of  them,  real  estate  owned  or  leased, 
and  outstanding  mortgages  or  obligations. 
The  bank  or  loan  association  checks  up  on 
this  statement  by  private  inquiries,  and 
county  records  are  examined  to  determine 
whether  the  applicant's  statements  are  cor- 
rect as  to  outstanding  obligations.  A 
cattle  inspector  is  then  sent  out  to  count 
and  examine  the  borrower's  stock.  He  re- 
ports as  to  quality  of  breeds,  condition 
of  pastures,  facilities  for  taking  care  of  the 
stock,  and  the  general  reputation  and 
ability  of  the  applicant.  If,  upon  receipt 
of  the  inspector's  report,  the  loan  is 
granted,  the  borrower  is  required  to  sign  a 
promissory  note  for  the  amount  advanced, 
and  to  execute  a  chattel  mortgage  on  the 
stock  and  its  increase,  feed  on  hand,  and 
sometimes  on  equipment  and  real  estate. 
Although  banks  and  the  more  conservative 
loan  associations  refuse  to  loan  more  than 
from  50%  to  75%  of  the  value  of  stock 
given  as  collateral,  less  careful  associa- 
tions consider  that  an  ample  margin  of 
safety  lies  in  the  probable  increase  of  the 
herds,  i.e.,  in  birth  of  calves  and  increase 
in  weight  of  steers. 

I  Cattle  loans  run  ordinarily  for  six 
/months.  This  term  is  adequate  for  the 
I  "feeder,"  who  buys  full-grown  steers  from 
the  range  and  fattens  them  for  beef  in 
three  or  four  months.  His  period  of  turn- 
over is  short.  The  stock  breeder,  however, 
usually  requires  a  longer  period  for  liqui- 
dation, and  consequently  must  secure  re- 
22] 


/ 


newals,  (wherein  lies  the  chief  defect  in 
the  present  system  of  financing).  Renew- 
als require  new  paper  and  new  inspection 
of  stock,  adding  further  expense  to  the 
negotiation,  and  the  semi-annual  payment 
of  interest  keeps  the  stock  raiser  in  a  con- 
stant state  of  unrest,  making  it  difficult 
for  him  to  delay  the  sale  of  stock  until 
the  best  prices  are  obtainable.  Yet  it  is 
through  the  short-term  feature  of  cattle  pa- 
per that  banks  and  cattle  loan  associations 
are  given  their  best  means  of  protection. 
They  may  refuse  to  renew  loans,  after  six 
months,  to  borrowers  who  do  not  show  evi- 
dence of  being  able  to  meet  their  obliga- 
tions. As  a  matter  of  practice,  however,  it 
is  usually  understood  that  stock  breeders 
may  secure  a  reasonable  number  of  renew- 
als of  their  notes,  since  it  is,  of  course,  to 
the  interest  of  the  lender  to  carry  them  un- 
til a  time  when  their  cattle  may  be  dis- 
posed of  at  a  profit  and  all  obligations  met 
in  full.  Such  renewals  should  be  granted 
with  caution,  however,  and  only  after 
careful  inspection  has  been  made  of  cattle 
securing  the  loan,  condition  of  the  pasture, 
and  a  forecast  of  beef  prices.  Failure  to 
check  up  on  borrowers  in  this  way,  and  a 
loo  liberal  policy  in  accepting  cattle  paper 
by  some  of  the  banks  and  loan  associations 
last  year,  has  placed  them  in  such  a  po- 
sition that  they  must  either  repeatedly  re- 
new inadequately  secured  loans,  until  cat- 
tle prices  shall  have  recovered,  or  foreclose 
and  take  heavy  losses. 

The  gross  profits  derived  by  cattle  loan 
companies  is  measured  by  the  difference 
between  the  interest  collected  from  bor- 
rowers and  the  discount  rate  of  the  bank 
through  which  the  paper  is  liquidated. 
The  average  cost  of  making  cattle  loans, 
including  inspection,  is  estimated  at  1% 
of  the  amount  of  the  loan.  The  prevailing 
interest  rate  imposed  by  cattle  loan  asso- 
ciations at  the  present  time  is  10%,  some- 
times with  additional  charges  amounting 
to  from  1%)  to  2%,  "to  cover  cost  of  in- 
spection." The  rates  at  which  banks  are 
now  discounting  cattle  paper  range  from 
7y2%  to  814%.  The  cattle  loan  asso- 
ciations therefore  have  a  possibility  of 
making  a  gross  profit  of  from  1%%  to 
414%  on  each  loan.  The  usual  profit  is 
said  to  be  2%. 

Cattle  paper  is  self-liquidating.  It  is 
short-term  paper  and  when  endorsed  by  re* 


I 


1 


liable  cattle  loan  associations  becomes 
good  "two-name"  paper.  It  should  there- 
fore enjoy  a  high  degree  of  liquidity. 
Loan  associations  dealing  in  cattle  paper 
may  handle  large  amounts,  running  into 
the  millions  of  dollars  annually,  with 
comparatively  small  working  capital. 
When  these  associations  grant  loans  which 
are  too  large  for  discount  through  any 
one  bank,  such  loans  are  parcelled  out 
among  several  banks,  much  after  the  man- 
ner of  the  Lloyd  insurance  risks.  Banks 
accepting  parts  of  individual  loans,  how- 
ever, must  do  so  with  extraordinary  care, 
since  the  division  of  the  cattleman's  note 
and  mortgage  into  parts  affords  opportu- 
nity for  sharp  practices. 

When  Money  is  Needed 

The  peaks  of  activity  in  cattle  loan  dis- 
counts are  reached  in  the  spring  and  fall 
seasons  of  the  year.  Cattlemen  usually 
need  money  for  the  purchase  of  new 
stock  for  the  ranches  in  April  and  May. 
Holders  of  leased  ranges  ordinarily  pay 
their  rent  in  the  fall.  This  is  also  the 
usual  time  for  settlement  of  ordinary  bills 
for  groceries,  feed  and  supplies. 

Figures  showing  the  volume  of  cattle 
paper  dealt  in  monthly  during  1920  and 
1921  by  loan  associations  in  this  region 
indicate  that  last  year  such  associations 
advanced  to  cattlemen  approximately 
$5,000,000,  the  largest  advances  having 
been  made  in  May  and  November.  For 
the  first  eight  months  of  1921,  loans  from 
the  same  sources  have  amounted  to  about 
$2,000,000,  the  largest  aggregate  amount 
for  any  one  month  occurring  in  April. 
The  value  of  cattle  paper  now  outstand- 
ing on  the  books  of  local  cattle  loan  asso- 
ciations is  thought  to  be  less  than 
$2,000,000. 

Reports  from  the  Federal  Reserve  Bank 
of  the  Twelfth  District  indicate  that 
the  volume  of  live  stock  paper  redis- 
counted  through  banks  so  far  this  year  has 
been  about  $24,000,000,  ranging  between 
$3,500,000  and  $4,500,000  per  month.  The 
largest  advances  were  made  in  April  and 
June.  The  total  value  of  live  stock  paper 
held  by  the  Federal  Reserve  Bank  on  the 
last  day  of  June,  1921  (the  latest  date 
for  which  figures  are  available)  was 
$14,633,000.  The  figures  published  by  the 
Federal  Reserve  Banks  include  all  classes 


of  livestock  paper.  Separate  records  of 
cattle  paper  are  not  kept,  but  cattle  loans 
undoubtedly  constitute  the  larger  part  of 
the  sum  of  all  livestock  loans  in  this  dis- 
trict. 

Shortage  of  Cattle 

Much  has  been  said  recently  of  the 
shortage  of  beef  cattle  in  this  country,  and 
official  surveys  indicate  that  there  are  in 
fact  less  cattle  per  capita  now  than  there 
were  in  1920,  though  the  shortage  is  less 
marked  in  California  and  Nevada  than  in 
other  stales.  The  actual  shortage  in  num- 
bers for  individual  districts  is  estimated 
by  livestock  associations  approximately  as 

fo^OWS:  c.ttto   Shoruge.    1921 

••  Compared  with  1920 

Northern    States 0% 

Southern    States 50% 

Central  States 25% 

California   10% 

Nevada    0% 

Census  figures  for  California  show  the 
number  of  beef  cattle  in  the  state  to  have 
been  1,229,086  in  January,  1920.  Unfor- 
tunately it  is  difficult  to  compare  these  fig- 
ures with  those  of  the  1910  census,  since 
the  count  for  the  latter  year  was  taken 
as  of  April  15,  three  and  one-half  months 
later  in  the  year  than  that  for  1920.  The 
1910  count,  therefore,  included  a  large 
number  of  spring  calves  which  would  not 
have  been  taken  in  the  1920  census.  On 
the  other  hand,  the  figures  for  1910  were, 
of  course,  reduced  by  the  number  of  cattle 
slaughtered  between  January  1  and  April 
15. 

Probably  the  best  comparable  records 
available  are  those  of  the  Bureau  of  Crop 
Estimates,  United  Stales  Department  of 
Agriculture,  which  publishes  cattle  census 
figures  periodically.  A  study  of  these 
records  indicates  that  while  there  is  an 
actual  shortage  of  cattle  in  the  United 
States  as  a  whole,  it  is  not  as  great  as  live- 
stock publications  make  it  out  to  be. 

Perhaps  the  best  way  of  determining 
whether  or  not  the  cattle  supply  is  below 
normal,  is  on  a  per  capita  basis.  Figures 
for  Arizona,  Nevada,  and  the  average  for 
the  United  States  as  a  whole  may  be  com- 
puted on  this  basis  as  follows: 

De- 

Per  1000  Per  lOOO  crease 

Cattle      Inhabl-      Cattle  Inhabi-  or  In- 

^  ...                           191*         tants          1920  tanu     crease 

Califotnia    1,339,000        563         1.634,000  477      —15% 

Arizona     796.000        389        1.000,000  299      —23% 

N'-vaHa    432,000        527           535.000  691       +S1% 

United   State*.. 41.178.434       446      44,75O,O0Q  433      -5.2% 

[23 


( 


More  significant  than  the  slight  per  cap- 
ita decrease  in  the  total  number  of  beef 
cattle  in  the  country,  however,  is  the  com- 
paratively large  decrease  in  the  number 
of  cows,  i.e.,  reproductive  stock.  The 
census  shows  that  there  were  100,000  less 
cows  in  California  in  1920  than  in  1910, 
a  decrease  of  33%,  when  there  should 
have  been  an  increase  of  44%,  to  keep 
pace  with  the  population.  The  reason  for 
this  is  found  in  the  fact  that  stockmen, 
hard  pressed  for  money,  and  unable  to 
secure  loans  to  carry  them  through,  have 
been  selling  cows  as  well  as  steers  for 
beef.  The  California  Cattlemen's  Associa- 
tion estimates  that  in  California  the  nor- 
mal ratio  of  cows  to  cattle  slaughtered  is 
25%,  while  this  year  it  has  been  38%, 
and  predicts  a  further  shortage  of  breed- 
ing stock  next  year. 

Consumption  of  beef  in  this  state  is  ap- 
proximately 500,000  head  per  year.  At 
the  time  of  the  census  (January,  1920), 
there  were  441,000  cows  of  calf-bearing 
age  (2  years  and  over)  available.  On  the 
basis  of  a  70%  calf  production,  about 
normal  for  the  state,  these  would  yield 
308,000  calves  per  year,  about  25%  of 
which  should  be  kept  for  breeding  pur- 
poses, leaving  231,000  calves  to  grow  up 
for  beef.  Of  the  441,000  breeding  cows 
now  on  farms  and  ranges,  one-fifth,  or 
88,000,  would  be  available  for  slaughter 
each  year,  since  a  cow  is  not  kept  for  calf 
bearing  after  it  is  5  years  of  age.  There 
are  also  about  800,000  dairy  cattle  in  the 
state.  These  will  supply  about  10%  of 
our  beef,  or  200,000  head,  this  year. 

From  the  three  sources  of  supply, 
therefore,  we  would  obtain  231,000, 
88,000  and  200,000  head,  respectively,  or 
a  total  of  519,000,  against  a  consumption 
of  500,000.  The  apparent  margin  of 
19,000  is  just  about  sufficient  to  cover  the 
regular  annual  4%  loss  from  disease  and 


24] 


exposure.  Obviously,  therefore,  if  there 
is  any  considerable  decrease  in  the  number 
of  breeding  cows  which  were  available 
last  year,  the  coming  supply  of  beef  in  this 
slate  will  be  less  than  that  of  previous 
years. 

Consumption  Below  Production 

Compensating  for  the  decreased  pro- 
duction of  beef  cattle  in  the  country  dur- 
ing the  past  year,  and  probably  a  cause 
of  any  such  shortage,  is  the  decreased  con- 
sumption of  beef.  The  per  capita  con- 
sumption of  beef  in  1919  was  60  pounds. 
In  1920  it  had  dropped  to  56.4  pounds,  a 
decline  in  one  year  of  6%.  More  startling 
than  these  are  the  figures  for  the  period 
from  1910  to  1920.  During  this  time 
beef  consumption  per  person  in  the  United 
States  decreased  from  78  pounds  to  56.4 
pounds,  a  decline  of  27%.  Decrease  in 
consumption  has  been,  therefore,  much 
greater  than  decrease  in  production,  and 
this  without  taking  into  consideration  the 
almost  complete  cessation  of  beef  exports. 

From  these  facts  it  would  appear  that 
although  there  is  a  slight  numerical  short- 
age of  cattle  this  year,  with  prospects  of 
an  even  smaller  number  on  the  ranges 
next  year  as  a  result  of  present  slaughter- 
ing of  breeding  stock,  the  situation  cannot 
be  regarded  as  alarming  from  a  food  stand- 
point. There  is  no  danger  of  a  meat 
famine.  When  the  supply  of  beef  be- 
comes scarce,  relative  prices  will  cause 
people  to  eat  less  beef  and  more  pork 
and  mutton,  or  even  substitutes  for  meat. 
As  measured  by  demand  there  is  no  short- 
age of  supply  at  the  present  time.  Either 
demand  must  be  brought  back  to  normal 
by  an  adjustment  of  retail  meat  prices  to 
popular  buying  power,  or  the  supply  even 
further  reduced,  before  the  economic  law 
can  operate  to  raise  cattle  prices. 


^    I  « 


-^ 


An  Offer  of  Service 

The  Department  of  Research  and  Service  of  the  Security 
Trust  &  Savings  Bank  is  prepared  to  furnish  complete  and 
accurate  information  regarding  any  line  of  business,  whether 
commercial,  agricultural  or  industrial,  of  Los  Angeles  and 
Southern  California. 

The  services  of  this  Department  are  offered,  free  of 
charge,  to  anyone  desiring  such  information,  and  the  Depart- 
ment will  make  detailed  surveys  and  reports  for  the  benefit 
of  those  interested. 

The  work  of  the  Department  is  carried  on  by  men 
specially  trained  in  research,  and  familiar  with  the  business 
and  financial  conditions  of  this  section. 

A  well-equipped  library  is  maintained  by  the  Department 
to  facilitate  its  services. 


■4.-^>-^i^i*^'-.jS 


INTENTIONAL  SECOND  EXPOSURE 


r' 


ii 


^ 


iTi 


More  significant  than  the  slight  per  cap- 
ita decrease  in  the  total  number  of  beef 
cattle  in  the  country,  however,  is  the  com- 
paratively large  decrease  in  the  number 
of  cows,  i.e.,  reproductive  stock.  The 
census  shows  that  there  were  100,000  less 
cows  in  California  in  1920  than  in  1910, 
a  decrease  of  33%,  when  there  should 
have  been  an  increase  of  44%,  to  keep 
pace  with  the  population.  The  reason  for 
this  is  found  in  the  fact  that  stockmen, 
hard  pressed  for  money,  and  unable  to 
secure  loans  to  carry  them  through,  have 
been  selling  cows  as  well  as  steers  for 
beef.  The  California  Cattlemen's  Associa- 
tion estimates  that  in  California  the  nor- 
mal ratio  of  cows  to  cattle  slaughtered  is 
25%,  while  this  year  it  has  been  38%, 
and  predicts  a  further  shortage  of  breed- 
ing stock  next  year. 

Consumption  of  beef  in  this  state  is  ap- 
proximately 500,000  head  per  year.  At 
the  time  of  the  census  (January,  1920), 
there  were  441,000  cows  of  calf-bearing 
age  (2  years  and  over)  available.  On  the 
basis  of  a  70%  calf  production,  about 
normal  for  the  state,  these  would  yield 
308,000  calves  per  year,  about  25 9?  of 
which  should  be  kept  for  breeding  pur- 
poses, leaving  231,000  calves  to  grow  up 
for  beef.  Of  the  441,000  breeding  cows 
now  on  farms  and  ranges,  one-fifth,  or 
88,000,  would  be  available  for  slaughter 
each  year,  since  a  cow  is  not  kept  for  calf 
bearing  after  it  is  5  years  of  age.  There 
are  also  about  800.000  dairy  cattle  in  the 
state.  These  will  supply  about  lO^V  of 
our  beef,  or  200,000  head,  this  year. 

From  the  three  sources  of  supply, 
therefore,  we  would  obtain  231,000, 
88,000  and  200,000  head,  respectively,  or 
a  total  of  519,000,  against  a  consumption 
of  500,000.  The  apparent  margin  of 
19,000  is  just  about  sufficient  to  cover  the 
regular  annual  4%  loss  from  disease  and 


exposure.  Obviously,  therefore,  if  there 
is  any  considerable  decrease  in  the  number 
of  breeding  cows  which  were  available 
last  year,  the  coming  supply  of  beef  in  this 
stale  will  be  less  than  that  of  previous 
years. 

Consumption  Below  Production 

Compensating  for  the  decreased  pro- 
duction of  beef  cattle  in  the  country  dur- 
ing the  past  year,  and  probably  a  cause 
of  any  such  shortage,  is  the  decreased  con- 
sumption of  beef.  The  per  capita  con- 
sumption of  beef  in  1919  was  60  pounds. 
In  1920  it  had  dropped  to  56.4  pounds,  a 
decline  in  one  year  of  6%.  More  startling 
than  these  are  the  figures  for  the  period 
from  1910  to  1920.  During  this  time 
beef  consumption  per  person  in  the  United 
States  decreased  from  78  pounds  to  56.4 
pounds,  a  decline  of  27%.  Decrease  in 
consumption  has  been,  therefore,  much 
greater  than  decrease  in  production,  and 
this  without  taking  into  consideration  the 
almost  complete  cessation  of  beef  exports. 

From  these  facts  it  would  appear  that 
although  there  is  a  slight  numerical  short- 
age of  cattle  this  year,  with  prospects  of 
an  even  smaller  number  on  the  ranges 
next  year  as  a  result  of  present  slaughter- 
ing of  breeding  stock,  the  situation  cannot 
be  regarded  as  alarming  from  a  food  stand- 
point. There  is  no  danger  of  a  meat 
famiiie.  When  the  supply  of  beef  be- 
comes scarce,  relative  prices  will  cause 
people  to  eat  less  beef  and  more  pork 
and  mutton,  or  even  substitutes  for  meat. 
As  measured  by  demand  there  is  no  short- 
age of  supply  at  the  present  time.  Either 
demand  must  be  brought  back  to  normal 
by  an  adjustment  of  retail  meat  prices  to 
popular  buying  power,  or  the  supply  even 
further  reduced,  before  the  economic  law 
can  operate  to  raise  cattle  prices. 


An  Offer  of  Service 

The  Department  of  Research  and  Service  of  the  Security 
Trust  &  Savings  Bank  is  prepared  to  furnish  complete  and 
accurate  information  regarding  any  line  of  business,  whether 
conunercial,  agricultural  or  industrial,  of  Los  Angeles  and 
Southern  California. 

The  services  of  this  Department  are  offered,  free  of 
charge,  to  anyone  desiring  such  information,  and  the  Depart- 
ment will  make  detailed  surveys  and  reports  for  the  benefit 
of  those  interested. 

The  work  of  the  Department  is  carried  on  by  men 
specially  trained  in  research,  and  familiar  with  the  business 
and  financial  conditions  of  this  section. 

A  well-equipped  library  is  maintained  by  the  Department 
to  facilitate  its  services. 


24] 


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Ban]:,   Los  .-.ix^elec.      Dept. 
of  ..eaearch  and  Service. 

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END  OF 
TITLE 


